Valuation Who puts up the money? (BMC, Bessemer; total of $6.6) How much is Curtis’ contribution worth at this stage? The “pre-money” value ($1.1; “post-money” value ($7.7, see Exh 9). VCs had 86% of capital) P/EBITDA 1997 (Exh 6); assuming 50% leverage P = $7,700 EDITDA = $629 Ratio = 12.2x In 2001: EBITDA = $50,192 (Increase due to 45x growth in revenues; 1.8x growth in CF margins) ROI = $18.8/$142 = 13.2% (after $135 of new equity financing) In 2001, at Exit via IPO at EBITDA x 12 = $600 million
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reorganization plan, which among others includes an additional acquisition (which raises new risk and debt in the short term). Selling off unsynergetic business units may have made more senses Bad execution * High leverage using overpriced shares as collateral. Given the this leverage in combination with relatively high coupon rates, debt service became problematic * Structuring debt based on collateral shares instead of others assets and cash flows makes a company highly dependent of debt
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considered, and due to this, the company decided to go for leverage buyout option. A large stake of VERITAS Software Corporation's stocks is owned by Seagate Technology, because of which its stock price is doubled (from its original price), however, the share price of Seagate Technology hardly changed for a long time. Therefore, the reason that the attempts and efforts of senior management were useless, made them decide to engage in Leverage Buyout (LBO). As a result, Seagate went for two fold transaction
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Workshop 4 Problems Kevin Rock MBA 465 Strategic Management BSA 555 November 1, 2011 David R. Gray, Ph.D 1. Why are acquisition strategies popular in many firms competing in the global economy? Because of globalization; deregulation of multiple industries in many different economies and favorable legislation; the number and size of domestic and cross-border acquisitions continues to increase; especially from emerging economies 2. What reasons account for firms’ decisions to
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Legal Content Managed Service Legal Content Management Services Overview • Most firms now have established Records Management departments, but many RM programs haven’t moved beyond managing paper into the electronic world, nor have they implemented and enforced formal policies and retention schedules. Attorneys in many firms still have the freedom to set their own rules for controlling and managing records. In many cases, organizations are still struggling to gain control over records that haven’t
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Results 2010 Interim Results Highlights • Record high growth of core operating profit over a half-year period • Record high margins due to strong onshore businesses and increasing involvement in value-added services • Delivered strong operating leverage with continued cost savings • Turnover modestly improved, reflecting the effects of early stage of the economic recovery together with contributions from previous acquisitions and outsourcing deals announced acquisition of 7 companies, and signed
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Case 9 & 10 Analysis Seagate Technology Buyout The Hertz Corporation Advanced Corporate Finance MW 2:00-3:15 PM Question 1 On page 1, the “value-gap” is two-fold. It signifies an under-valuation of Seagate’s core disk drive operating assets due to unfavorable public market investor preferences. Furthermore, the value of the Veritas share price has caused the Veritas stake to far outweigh the value of Seagate’s stand-alone market capitalization. Since Seagate does not own at least 80%
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JAVA: Cost cutting may not be the long-term EPS driver Sun Microsystems, Inc. (JAVA) continues with its resurrection of earnings by treading into positive turf and achieving an operating profit in FY07, the first time since FY01. JAVA recorded three consecutive quarters of positive EPS in FY07 and is now targeting an operating margin of at least 10% in FY09. However, underlying this growth is a scenario that bristles with complexities, and not everything is as rosy as it seems. For instance
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0.3 for reserves & surplus Thus final WACC, using equation (1), (5) and (6) is WACC = (0.5*6.35) + (0.2* 8.74) + (0.3*6.35) = 3.175 + 1.748 + 1.905 WACC = 6.828 PART 2: DEGREE OF COMBINED LEVERAGE CALCULATION DCL is A leverage ratio that summarizes the combined effect the degree of operating leverage (DOL),
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Assignment 3 1) Look at the cash-flow statement survey. a. Which companies got an emergency loan? How much? Andrews got an emergency loan worth, $ 17,102 Chester got an emergency loan worth, $ 2,833 b. For each company you mentioned in (a) explain why it got an emergency loan(8 points) Andrews had the following defaults: 1- Net loss, ($ 838) 2- A very high level of inventory, $ 24,718 3- A great amount of accounts receivable, $ 2,280
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