VCSimulationReflection - Hannah Phua(z3372782 Judy...

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Hannah Phua (z3372782) Judy Tran (z3372603) Evan Wong (z3374153) Yuen Tat Lin (z3372172) PRIVATE EQUITY SIMULATION: REFLECTION QUESTION 1: What rationales did you use for (6 marks) (a) your valuation of Celanese The simulation provided three methods of valuation for Celanese: CCF, ECF and multiples-based. From these, we decided to rely more on the ECF and multiples-based valuations as the CCF method was inappropriate for us to value a leveraged-buyout through its use of a constant WACC that does not account for changing debt levels. By using the ECF method, we were able to ensure that the equity value we contributed did not exceed the present equity value, given our projections and taking into account expected operating and debt levels. (b) your approach to due diligence Due to our limited budget for due diligence, we did a sensitivity analysis on the various operating assumptions to determine the key drivers of value for Celanese. From this analysis we decided to purchase the estimates from the consultant for COGS, sales growth projections and the Southern Methanol restructuring opportunity. Furthermore,
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