Case PRIVATE EQUITY CASE: MERGER CONSOLIDATION The questions below COMBINE the Ohio & Maryland PT acquisitions as if th Learning Objectives At the end of the course, to apply the financial analysis and decision making techniques to size-up a business and make a recommendation about its value. Reading Sections of the Cohen Finance Workbook as necessary for review, and Wk1-6 Solutions as ne 1 Look at beginning and end of case to see what is going on. 2 Closely examine the questions you have to answer - they simplify the case situation to create a doable final exam assignment. 3 Figure out what weekly solutions and Cohen Finance Workbook sections you mig 4 Proceed to answer the questions, one-at-a-time, as you refer to the your needed Questions ANSWER IN THE TABS Q1 Calculate the cost of capital (k-wacc) for the two acquisition companies combined Page 7 of the case has the inputs; supply missing inputs using judgment and wha Q2 Complete the FCF Valuation and the Market Multiples Valuation. Some data is en The yellow-shaded cells guide you. Data is for Ohio and Maryland PT companies Explain what your analysis tells you about the likely value of these companies (co Q3 Calculate the debt capacity of the combined PT companies (see Financial Statem panels on the Q3 tab - use only the debt capacity panel. Explain how much addit based on your analysis. Q4 Answers here pull together the analysis you did for Q1, Q2 and Q3. See the ques
hey are a single company… ecessary. ght need to review. explanatory material. d, as if they are a single company (Column D on Q1 tab) at you learned in this course. ntered for you; some you must enter. s combined. ombined as if it was a single company). ments tab). Disregard the yellow-shaded tional debt can be borrowed stions on the Q4 tab.
THUMBNAIL SKETCH: FINANCING DEBT EQUITY BRIEF ANALYSIS DEBT DUPONT RATIOS HISTORICAL RAI/S & B/S FORECAST EFN TIE NORMAL DEBT RATIO WORKING CAPITAL I/S, B/S, & RATIOS EQUITY STOCK PRICE EBIT CHART MKT CAP EXTENDED ANALYSIS FULL RATIOS LIQUIDITY income risk control mktblty flexblty timing LEVERAGE ASSET USE PROFITABILITY VALUATION GROWTH CAPITAL BUDGETIN OP & CAP NATCF, NPV, IRR, PAYBACK ANALYSIS STEPS: 1-HISTORICAL RATIOS 2-K-WACC 3-CAPITAL BUDGETING K-WACC 5-EQUITY VALUATION 6-FINANCING VALUATION ENTERPRISE VALUE USING FREE CASH FLOW MARKET MULTIPLES: P/E, MV/BV, REV, EBIT 4-FORECAST & EFN
INCOME STATEMENT BALANCE SHEET WORKING CAPITAL Revenue ASSETS LIABILITIES AND EQUITY Cost of sales Current assets Current liabilities ?what levels of ca, cl, s-t loans? Gross profit Cash Trade payables CAPITAL BUDGETING Other operating income Investments Other accruals ?which projects to accept?