Dell Lbo

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Proposal: The proposal of our team is in line with the offer proposed by Michael Dell and Silver Lake. Share price offered to shareholders was $13.75/share resulting in post deal leverage of 3.7x for Dell as a private company. Fund break-up is mentioned in the below table. Proposal New debt $ 13.50 Case (foreign subs) $ 7.40 Microsoft $ 2.00 Silver lake $ 1.40 Michel dell $ 0.75 Total $ 25.05 net debt/EBITDA 3.7 x A valuation for Dell was done based on projected cash flow for the next 5 years. These projected cash flows assume growth rate for Dell to be 7% and WACC to be 8.5%. The valuation is based…show more content…
Southeastern/Icahn proposal and offers from other private equity firms: Southeastern and Icahn proposal lacks credibility because it has not secured committed financing for any of their proposal and Southeastern sale of 72 mil Dell shares for less than bid offer reiterates that it would add debt to a deterioration operating performance. The proposal would add debt while leaving the company public making it more difficult, slower and riskier to accomplish company’s transformation. Other private equity companies KKR and Blackstone Group proposed $12 - $13/ share and $14.25 /share value but backed out due to unprecedented drop in PC market. Appendix DISCOUNTED CASH FLOW ANALYSIS - DELL Free Cashflow Buildup Base year Projected Annual Forecast 2012 2013 2014 2015 2016 2017 Period 1 2 3 4 5 Total Revenues $ 56,940.00 $ 60,925.80 $ 65,190.61 $ 69,753.95 $ 74,636.72 $ 79,861.30 EBIT $ 2,841.00 $ 3,039.87 $ 3,252.66 $ 3,480.35 $ 3,723.97 $ 3,984.65 Tax Rate 40.00% 40.00% 40.00% 40.00% 40.00% EBIAT $ 1,823.92 $ 1,951.60 $ 2,088.21 $ 2,234.38 $ 2,390.79 Depreciation & Amortization

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