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Fair Value Today in 2019 Value to Sales Multiple
Overall Firm Value 200,650,309 293,542,761 2.92
0.78
0.89
0.78
0.89
she be in a position to take Manufacturing Division public in 2019 or sell it outright - Yes
Assumptions
As per the case
Newell Manufacturing and Distribution is a debt free company and hence the free cash flow to equity is free cash flow to firm
The compnay come out of investment cycle and need no incremental capital expenditure over next decade at least
The company working capital need is very short term and met by line of credit which is paid off immediately and hence rema
It is assumed that the company maintain its working capital and hence there is no change in working capital
Terminal Growth for Newell Design (Mailorder) division is given as 9% and for Newell Manufacturing division is given as 10%
Terminal Growth for overall organization is taken at an average of explicit forecast period which is at 7%
Peer set in case of Newell Design_Mail Order Division has been considered only such entity which has mailing list of upward
Peerset in case of Newell Manufacturing Division has been considered by taking all entities highlighted
equity is free cash flow to firm
next decade at least
ff immediately and hence remains no outstanding at end of the year
orking capital
turing division is given as 10% beyond 2019 onwards
3 4 5 6
7.4% 6.4% 5.9% 7.8%
6,343,979 7,217,496 7,718,735 6,299,187
1,927,334 1,985,154 2,044,709 2,163,132
- - - -
- - - -
8,271,313 9,202,650 9,763,444 8,462,319
293,542,761
8,271,313 9,202,650 9,763,444 302,005,080
0.7496 0.6809 0.6185 0.5619
164934484.96365
35715824.027665
200650308.99131
0.821999656
Newell Design - Mail Order Division (Stand Alone Estimate)
Annual Growth in Sales 9.0% 9.0%
Actual Projected Projected
2013 2014 2015
Revenue 36,458,124 39,739,355 43,315,897
COGS (25,520,687) (28,214,942) (30,321,128)
SG&A (7,656,206) (9,537,445) (10,395,815)
Depr (124,897) (126,146) (129,930)
EBIT 3,156,334 1,860,822 2,469,024
Interest (12,058) (12,299) (12,299)
EBT 3,144,276 1,848,523 2,456,725
Taxes (723,184) (314,249) (417,643)
Net Income 2,421,092 1,534,274 2,039,082
3 4 5 6
9.0% 9.0% 8.0% 9.0%
2,432,240 2,657,993 3,004,178 2,209,790
133,828 137,843 141,978 146,238
- - - -
- - - -
2,566,068 2,795,836 3,146,156 2,356,028
250,418,115
2,566,068 2,795,836 3,146,156 252,774,143
0.7508 0.6824 0.6202 0.5637
141157953.87516
10414589.377981
151572543.25314
0.9312897366
Newell Manufacturing_Manufacturing Division (Stand Alone Estimate)
Annual Growth in Sales 5.0% 3.0%
Actual Projected Projected
2013 2014 2015
Revenue 31,587,624 33,167,005 34,162,015
COGS (24,322,470) (25,206,924) (26,304,752)
SG&A (1,895,257) (2,321,690) (2,391,341)
Depr (1,579,381) (1,658,350) (1,708,101)
EBIT 3,790,515 3,980,041 3,757,822
Interest (12,058) (12,299) (12,299)
EBT 3,778,457 3,967,741 3,745,523
Taxes (869,045) (912,581) (861,470)
Net Income 2,909,412 3,055,161 2,884,052
3 4 5 6
5.0% 3.0% 3.0% 6.0%
3,028,634 3,209,526 3,051,016 2,785,364
1,793,506 1,847,311 1,902,730 2,016,894
- - - -
- - - -
4,822,140 5,056,837 4,953,746 4,802,258
867,892,323
4,822,140 5,056,837 4,953,746 872,694,581
0.7390 0.6681 0.6040 0.5461
Comparable Companies: Balance Sheet Information
Notes:
Publicly Traded = yes for companies that were publicly traded prior to the M&A transaction; = no for companies that were p
Bond ratings expressed from the S&P scale
NM = Not Meaningful and indicates a company without publicly traded debt though it may have bank loans
Leverage (Book Value of Debt/Book Type of Debt Debt Rating Borrowing Tax Rate
Value of Total Assets) Financing Rate
0.01 Bank Loans NM 5% 23%
0.23 Bank Loans NM 7% 33%
0.52 Bonds A 9% 17%
0.51 Bonds AA 9% 17%
0.52 Bonds BBB 9% 17%
0.55 Bonds BB 9% 23%
0.57 Bank Loans NM 10% 17%
0.60 Bonds BB 9% 23%
0.08 Bank Loans NM 5% 23%
0.20 Bank Loans NM 6% 33%
0.61 Bonds BB 10% 10%
0.35 Bank Loans NM 8% 23%
0.25 Bank Loans NM 7% 23%
0.18 Bonds AAA 5% 33%
0.35 Bonds AA 7% 17%
0.27 Bank Loans NM 7% 10%
0.13 Bank Loans NM 6% 10%
0.25 Bank Loans NM 7% 17%
0.29 Bank Loans NM 7% 10%
0.07 Bank Loans NM 5% 17%
0.33 7% 20%
r to the M&A transaction; = no for companies that were privately owned before the transaction
Notes:
Publicly Traded = yes for companies that were publicly traded prior to the M&A transaction; = no for companies that
Mailing List is measured in number of households
Market Values for publicly traded companies are calculated as the per share price 30 days before the transaction mu
For private companies, market value of equity is estimated by fundamenta-basedl multiples analysis o
Equity Value Equity Beta Purchase Price Equity Premium paid over Value to Sales
Market Acquired Market Value Multiple
action; = no for companies that were privately owned before the transaction
10%
5%
4%
5%
5%
4%
3%
4%
11%
8%
4%
5%
7%
5%
2%
5%
4%
3%
3%
2%
5%
Unlevered Beta
HAMADA EQUATION
Levered beta / [1+(1-Tax rate) * Debt / Equity] 1.01 1.00
Market Return (Rm) 10.00% 10.00%
Risk-free rate (Rf) 3.00% 3.00%
Cost of Equity
CAPM
Rf + Beta * (RM - Rf) 10.08% 10.03%
1.09
10.00%
3.00%
10.61%
10%