However, this process has taught us something very important: For us to believe that Biomet’s shares are worth $30, rather than $20, we have to believe that the firm can hold off its competition and grow at an above-average rate for a long period of time. Companies that can increase free cash flow at an average annual rate of 12 percent for a lengthy period of time—which is what our second scenario assumes—are few and far between, after all.
