Problem -
Acquisition target
MUST DO:
1) List all the pros, and cons of such an acquisition, using whatever analysis techniques you choose.
2) However - YOU MUST explain why you selected the methods you did, and how you intend to "boil this all down" into a cohesive proposal/recommendation
Pay attention: losses shown are non-cash write offs, and he also likes the efficiency of the firm, given inventory is less now (even with lower sales) and the debt on the firm to date is less than ½ total assets.
A few tidbits that will maybe make your life easier - for the final task (valuing the company)
The Beta estimates vary on this firm, but it's not for the faint of heart. Beta's have been estimated from/between 2.5 and 2.75
The goal is high return potential company
BTW - the debt issued (so far) by the company carries a coupon (interest rate) of 6.65% per annum
So - let's assume you think there is some value to a company that's had > $1.5 billion in revenues/sales over the last few years
MUST DO:
3) What do you think the potential should pay for this company, (maximum price) Explain IN DETAIL your logic and methodology!
See that attached Excel spreadsheet for the financial data you'll need to get this analysis done.
Attachment:- Assignment.rar