Valuation of Air Thread Connections

For calculations of the acquisition price, the P/E is taken to be 8.6. The acquisition price is calculated by multiplying this value with the historical average of net income. Thus, the acquisition price comes out to be $186,215,800, which is $189,186,673 less than the enterprise value.

As a seller of SS to BV or IB, the reservation price for SS should be the minimum price for SS to accept the deal (either the cash deal offered by IB or the stock deal offered by BV). It is known that the minimum reservation prices of SS is the market price ($42.9) for cash deal ((Harvard Business Publishing, 2015). The determination of reservation price for BV needs to incorporate synergies and control benefits as a buyer. As a result, we will choose the highest reservation price using valuation methods and that is, $49.83 with the optimal synergies and WACC method. Though both differed from the average prices in the class, it is reasonable to suspect individuals neglected the cash deal option of IB and contributes to the higher reservation price for SS than my expectation. Also, for the overestimation of reservation price for BV, it is possible that single valuation methodology may trigger biases to lift up the result from its fair value. Hence, a weighted average of all valuation for the price may be more reliable and accurate.

During the 1980s, the air express industry was a medium to attractive industry to already be a major player in, but not a very attractive industry to try and break into. The industry can be characterized by high rivalry from competitors who compete on the same services with very little differentiation, medium power from suppliers who supply the resources necessary to run the business, high buyer power because customers can basically find an equal service from any firm in the industry, low substitution threat from other means of shipping transportation, and low threat of new entrants due to the high initial capital outlay and need of management

With the BCG Matric analysis, we can argue that Easy Jet enjoys a viable competitive position because of its actual market growth. However, its prices have been compared with those of rival firms. This has clarified that Easy Jet emphasizes on being a low-cost carrier with no surplus in-flight services. Writers such as Quelch & Deshpande (2004, p. 71) argue that the Boston Consulting Group growth/share matrix has offered an opportunity to establish the market share of Easy Jet and the company's growth rate. In the context of the company's low cost market, it is clear that the market is still are still increasing. In addition, with the current fleet volume of 80 aircrafts, Easy Jet can serve 160 routes across Europe. Industry experts have associated such massive penetration with the rise in numbers of passengers and a relative rise in market share. Consequently, it is clear that the company has become a star. Nevertheless, Easy Jet must expand its market share for it to transform into a source of income after the decline of the market's growth rate. With respect to the company's Boston Consulting Group growth/share matrix analysis, we can claim that the cash flow of Easy Jet from operating activities have declined as well as the annual finances. Nevertheless, the acquiring firm's cash flow statement is the main area of focus (Butler &

Accordingly, the corporation can capitalize either to buy over any of the existing airways or transfer a section of its fleet to the budget jetliners. In this context, the rear one is preferable to distribute the available resources. Ultimately, it must manipulate and screen the execution of the scheme.

Futronics Inc. is a $2 billion firm that sells communications services. Founded in 1937, Futronics Inc. has provided consumer products, as well as government systems and services, for well over half a century. Due to a sharp increase in competition, flattened sales, and external economic conditions, Futronics Inc. is implementing a corporate overhead reduction program. The proposal is to replace the company’s central office stores with outside vendors. The investment will cost $1,000,000 and yield incremental cash flows of $450,000 in year one (1), $350,000 in year two (2), $300,000 in year three (3), and $250,000 in year four (4). There is no salvage value of the asset, and the firm has a cost of capital of 8%. Using capital budget methods, Net Profit Value, Internal Rate of Return and Payback method, the capital investment can be appraised. Futronics Inc.

The term cost behavior is used to describe whether a cost changes as output changes. In this case the costs are tightly shielded. In order to describe the cost behavior of the industry, we have to study the process that results in cost incurrence. Based on the information in the AT&T case, the industry features a high proportion of fixed costs in relation to acquiring spectrum and building a network. Variable costs are relatively low and, in the case of text messages, are very low. The cost structure in the wireless industry is dominated by fixed costs, so the

To evaluate this transaction for the benefits of HP’s shareholders, we use the excess earnings model to forecast HP’s stock price if it standalone, CPQ’s stock price as a separate company and the stock price after the merger. Then we make a comparison between HP’s stock price when it operates alone and the stock price after the merger to make the decision of merger.

In a first step we have to postulate when the successful exit is going to happen. Normally this period is assumed to be between 3 and 7 years long. In our case, we make the assumption that a successful exit is going to happen in 1999. Since we are only concerned about the successful scenario, we go along with the projection of AccessLine, which is probably overoptimistic, and use its expected revenue of 208M at the time the exit happens. After the IPO, we presume the company will grow at a high rate for the next five years in the 75 percentile as proposed by Metrick, Andrew and Ayako Yasuda in their “Venture Capital and the Finance of innovation” book. We chose five years since the typical firm reaches maturity within five years after the IPO. Besides, we assume a tax rate of 30.64% given by the industry average (Damodaran 2013). As a discount rate, we use simply the industry average. Alternatively, we could use the Betas of the comparable companies. This gives us an unlevered average beta of 0.5*(1.39+2.03) since both companies are completely equity financed. The risk free rate was given by 7.1%, if we assume a risk premium of 5.79% (Damodaran for 1.4.13) we get a cost of capital of 16.9% using the CAPM equation. Because we only have two comparable companies we opt to do our calculations with the industry wide average discount rate. The operating margin at the exit date is estimated in a way that we reach a Net

America Cable Company (ACC) should use APV approach to value cash flows from 2008 to 2012. This is because ACC uses classis LBO approach for acquisition where it purchases the target with significant amount of debt, and then in the long run paid the debt to bring down the leverage to industry norms. The goal is to use a tax efficient route and maximize the present value of tax shields, and minimize the amount of up-front equity invested in the deal.

a) We calculated the total value of AirThread (before considering any synergies) by subtracting the value of the non-operating assets from the going concern value. This gave us a total value of $6237.85.

Analysts estimate that the $80 million in cost saving could be realized after the acquisition , however certain other costs associated with the integration approximately $130 million would occur .Hence, I take these cost savings and integration costs into consideration for the with-synergies valuation. Incorporating the effects of 80million cost savings for the merged firm (to be achieved by end of 2007 and assumed to incur in perpetuity then on) and 130 million integration costs (half of this accounted at the beginning years) in the estimated EBITs for Torrington, a new horizon value is estimated, the new FCF is discounted by acquiring company’s WACC 8.39%. Torrington company’s with- synergies valuation $1386.38 million exceeds the value as a stand-alone entity by approximately $286 million. sheet2: With-synergies Valuation of Torrington-DCF Method.

In order to evaluate the prospective IRRs from the Boeing 7E7, we first try to estimate an appropriate required rate of return for accepting this project. The capital asset pricing model is applied to estimate the cost of equity of the commercial aircraft division:

Airborne Express has many options available for sustainable growth and success in the coming years. After the recent 29% increase in revenue over the past year, there are opportunities to take into consideration that will boost this growth for the fourth quarter. This company should join the “industry trend” of distance-based pricing. This will result in higher revenues, and will give Airborne Express a more substantial budget to merge with Roadway Package System in order to create a more technologically advanced tracking system. This

I chose Air France as a company to analyze it financially-speaking. But, as my major is in economy in ENPC, I will also include strategic