In a discounted free cash flow model, which item would Vista Corp. likely exclude when valuing an acquired business?

In a discounted free cash flow model, overhead expenses from Vista corporate departments are likely to be excluded when valuing an acquired business. This is because the model focuses on estimating the cash flows that the target company can generate independently, and using the resources directly associated with that acquisition. Including overhead expenses from Vista would distort the true operational performance and cash flow generation of the acquired business, as these expenses are not directly related to the target itself but rather to the parent company’s overall operations.

Excluding such overhead expenses ensures a clearer picture of the target's profitability and potential future cash flows that will be available for distribution to stakeholders after the acquisition. In contrast, other components like future revenue projections, historical performance metrics, and the market value of debt play a significant role in determining the target’s standalone value and are therefore typically included in the valuation process.