BAIN DOLLARAMA LBO

4013 Words Apr 14th, 2015 17 Pages
DOLLARAMA LBO

TO: BAIN CAPITAL

FROM: ANALYST GROUP
MICHAEL MALO
SEBASTIEN HUBERT
IVANINA MINCHEVA

SUBJECT: INVESTOR RETURNS

DATE: NOVEMBER 20th, 2004

DOLLARAMA LBO

TO: BAIN CAPITAL

FROM: ANALYST GROUP
MICHAEL MALO
SEBASTIEN HUBERT
IVANINA MINCHEVA

SUBJECT: INVESTOR RETURNS

DATE: NOVEMBER 20th, 2004

TABLE OF CONTENTS

INTRODUCTION 4
INDEPENDENT VALUATION OF DOLLARAMA 5
POTENTIAL IMPROVEMENTS TO DOLLARAMA OPERATIONS 11
RECOMMENDATION 17
APPENDIX 19

INTRODUCTION

We are a group of consultants from Montreal hired by Bain Capital to assess the profitability of the Dollarama leverage buyout option and to determine whether or not Bain Capital should go on with this opportunity.

In this analysis, we will
…show more content…
Therefore for the analysis of Dollarama we will chose an entry multiple of x11.1.

We also know that Louis was contemplating a possible IPO exit strategy before the end of the holding period term. To estimate a multiple for this IPO exit, we need to look at the Price/Earnings ratio for Dollarama. Using the same methodology as above, we compared Dollarama to the same group of companies and computed the average P/E ratio for the set, see Exhibit 6a. We will consider the values for the year 2005 and will take a multiple of 24.6 for an eventual IPO exit.

Using the above multiples we are able to come up with the following price estimations for the LBO of Dollarama. With an entry multiple of 11.1 Bain will have to purchase Dollarama for the amount of $1.218 billion (excluding fees).

Exhibit 7.a

The Transaction would be structured in the following way as per Exhibit 7b.

Exhibit 7b

Bain will pay for Dollarama by borrowing $600 million and the rest will be contributed as Equity amounting to $640 million. Louis is suggesting that her institution will provide the financing, but will find it more profitable to later syndicate the debt, once the deal is closed.

Total transaction breakdown where 98% of total cost represents the purchase price and 2% of total cost represents

More about BAIN DOLLARAMA LBO

Open Document