Finance Simulation: M&A in Wine Country
This preliminary report is to be typed and turned in at the beginning of class next week. Please provide thoughtful discussion addressing the following questions. Answers to qualitative questions should be at least half a page in length.
1. What are some key financial differences between the three companies in the simulation?
2. What are the strategic justifications for your firm to undertake a merger (either as acquirer or target) within the economic context of the simulation? That is, what are the pros for your firm to either acquire or be acquired by another firm? Why does a merger make sense in this industry at this time?
3. value Bel Vino andiStarshinelusing market multiples. How did you decide which comparable companies to include in your analysis?
4. What are the reservation values you calculated? Briefly justify your reservation prices. Provide screen shots of your APV and WACC models for both Starshine and Bel Vino.
5. What is your initial bidding/negotiation strategy?
a. Do you want to be an acquirer or target? Why?
b. Specify your choice of merger partner and initial offer price (or price you hope to receive as a first offer).
c. What is the rationale behind the choice of target, your opening bid and your overall bidding strategy? The answer to this question should include a justification of your opening bid/ask price per share.