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8/3/2019 DCF Analysis Completed

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Investment BankingValuation, Leveraged Buyouts,

and Mergers & Acquisitions

DCF Analysis - Completed

JOSHUA ROSENBAUM

JOSHUA PEARL


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alueCo Corporationensitivity Analysis

$ in millions)

Enterprise Value

Exit Multiple

1,133.3 6.0x 6.5x 7.0x 7.5x 8.0x 858.3 6.0x

10.0% 1,060 1,119 1,177 1,236 1,295 10.0% 785

10.5% 1,040 1,098 1,155 1,213 1,270 10.5% 765

11.0% 1,021 1,077 $1,133 1,190 1,246 11.0% 74611.5% 1,002 1,057 1,112 1,167 1,222 11.5% 72712.0% 984 1,038 1,091 1,145 1,199 12.0% 709

Implied Share Price PV of T

Exit Multiple

17.2 6.0x 6.5x 7.0x 7.5x 8.0x 0.7 6.0x

10.0% 17.17 17.17 17.17 17.17 17.17 10.0% 66.6% 10.5% 17.17 17.17 17.17 17.17 17.17 10.5% 66.3%11.0% 17.17 17.17 $17.17 17.17 17.17 11.0% 66.1%

11.5% 17.17 17.17 17.17 17.17 17.17 11.5% 65.8%

12.0% 17.17 17.17 17.17 17.17 17.17 12.0% 65.6%

Implied Perpetuity Growth Rate

Exit Multiple

0.0 6.0x 6.5x 7.0x 7.5x 8.0x 7.7 6.0x

10.0% 0.9% 1.5% 2.1% 2.6% 3.0% 10.0% 7.2x

10.5% 1.3% 2.0% 2.5% 3.0% 3.5% 10.5% 7.1x

11.0% 1.7% 2.4% 3.0% 3.5% 3.9% 11.0% 7.0x

11.5% 2.2% 2.8% 3.4% 3.9% 4.4% 11.5% 6.8x

12.0% 2.6% 3.3% 3.9% 4.4% 4.8% 12.0% 6.7x

WACC

WACC

WACC

WACC

Imp

WACC

WACC


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ValueCo CorporationWeighted Average Cost of Capital Analysis($ in millions)

Capital Structure Predicted Market Market Debt/

Debt-to-Total Capitalization 30.0% Company Levered Beta(4)

Value of Debt Value of Equity Equity

Equity-to-Total Capitalization 70.0% Adler Industries 1.11 $575.0 $2,600.0 22Lanzarone International 1.08 515.0 1,750.0 29Lajoux Global 1.35 715.0 1,050.0 68

Cost of Debt Momper Corp. 1.25 550.0 1,000.0 55Cost of Debt 6.0% McMenamin & Co. 1.19 250.0 630.0 39

Tax Rate 38.0%After-tax Cost of Debt 3.7% Mean 1.20 42Median 1.19 39

Cost of Equity

Risk-free Rate(1) 4.0% Mean Target

Market Risk Premium(2) 7.1% Unlevered Debt/

Levered Beta 1.20 Beta Equity

Size Premium(3) 1.65% Relevered Beta 0.95 42

Cost of Equity 14.1%

WACC 11.0% 0.1 5.0% 5.5% 6.0%10.0% 11.9% 11.9% 11.9%

20.0% 11.3% 11.4% 11.5%30.0% 10.8% 10.9% 11.0%

40.0% 10.3% 10.4% 10.6%50.0% 9.8% 10.0% 10.1%

(1) Interpolated yield on 20-year U.S. Treasury(2) Obtained from Ibbotson SBBIValuation Yearbook

(3) Low-Cap Decile size premium based on market capitalization, per Ibbotson

(4) Sourced from Barra

Pre-tax Cost of

Debt-to

-Total

Capitalization

WACC Calculation Comparable Companies Unlevered Beta

ValueCo Relevered Beta

WACC Sensitivity Analysis


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