MA 2011 BSBA Class 6 Interpreting Multiples (1)

MA 2011 BSBA Class 6 Interpreting Multiples (1) - Mergers...

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Unformatted text preview: Mergers & Acquisitions Class 6 1 Prof. David Ravenscraft Kenan-Flagler Business School University of North Carolina Interpreting Multiples Public Multiples for Adams (Getting Data Exercise) 2 Hershey Nestle Wrigley Price 76.99 30.90 54.88 # Shares 130 3880 Net Debt 854-2822 Market Value Enterprise Value Sales 4172 89160 EBITDA 993 13482 EV/Sales Multiple EV/EBITDA Multiple EBITDA/Sales Margin Adams EV (Sales) in millions, except share price. US$ (Hershey, Wrigley), CHF (Nestle) Using Wrigley’s 2002 fiscal year report (at end of handout), compute the Sales and EBITDA multiples for Wrigley. Apply them to Adams. For this exercise, you need to find # shares, sales, calculate net debt and EBITDA (use operating income + depreciation & amortization). Other calculations same as exercise. You can use public multiple Excel file on website. What implication does this have for the value of Adams? Interpreting results from multiples 3 Public Multiples n Compares target to similar firms who have not been acquired (so prices do not contain premium) n Main purpose ¨ Estimate stand alone value for nonpublic target ¨ Benchmark public target against comparable firms n Secondary purposes ¨ Guide discounted cash flow (DCF) analysis ¨ Tell and estimate synergy story if comparable firms better than target ¨ Guide transaction comparables using accounting multiples 4 Public multiples as benchmarking when target is public...
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This note was uploaded on 02/13/2012 for the course BUSI 599 taught by Professor Ravenscraft during the Fall '10 term at UNC.

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MA 2011 BSBA Class 6 Interpreting Multiples (1) - Mergers...

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