According to the exhibit 2 we can get the 2005e

According to the Exhibit 2, we can get the 2005E adjusted EBITDA of $109,746,
Enterprise Value = Enterprise Value/EBITDA multiplier * EBITDA
And the range of multiplier is 6.2-10.8, we then can get the range of the valuation
6.2*$109,746-10.8*$109,746
The range is: CAD$680.425-CAD$1,185,356
Which equals to USD$811.27-USD$1,413.30
The average valuation is $1,112.29 million US dollars

Additionally, Louis estimated fee of $22.5 million would be incurred from the transaction, and
there will be 3 million dollars each year, charged by BAIN, as management fees for Dollarama.
Thus, Total transaction fee = $1,112.29+$22.5+$3*5=$1149.79 million US dollars.
Question 4&5. Make all necessary assumptions to estimate an expected IRR
for Bain Capital. Assess the risk considerations of the LBO using a sensitivity analysis.
To estimate rational expected return and calculate IRR for Bain Capital, the modelling
a Leveraged buy-out is adopted for this analysis.
Step 1 : Determine the purchase price and amount of debt and equity required
The price of the equity.
Dollarama is a private company. The price of the equity will be the calculated
enterprise value minus the debt of the Dollarama. The EBITDA multiple is discussed
in the questions above. The range of EBITDA multiple is chosen between 6.2 and
10.8. According to the case, Bain Capital is not the only investor suitable for
Dollarama- it has serval competitors. So, the bid price should have a certain level of
competitiveness to win the deal, we assume EBITDA multiple is 9.84.
Fees due to advisory and Financing costs
Louis estimated the transaction cost of $22.5 million and $15 management fee would
be charged include in purchase price.
Debt held by the Target to be assumed or refinanced by the acquirer.
Dollarama currently don’t have any outstanding debt. So, in order to calculate the
maximum debt in the capital structure, we need to estimate the particular range of
debt/EBITDA in Canadian value retailer industry. According to the analysis in
Exhibit5, the range of debt/EBITDA ratio of the industry is between 1.2 and 4.7. If the
ratio is too high, it will bring additional risk to Bain’s capital. So, we assume the
debt/EBITDA is 2.3.