Congoleum Corporation Executive Summary In valuing the target company Congoleum after an LBO by First Boston found the expected free cash flows generated by this firm from 1980 to 1984. These numbers were based on values provided in the case. From there‚ we employed the Adjusted Present Value method to discount these cash flows because we assumed that Congoleum was varying its Debt to Equity ratio during those years. We discounted these cash flows by the required return on assets that was in
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automotive and industrial distribution. In 1979‚ First Boston Corporation bid for an LBO of Congoleum for a price per share of $38. The purpose of this analysis is to assess Congoleum as a LBO candidate and determine whether the offer made by First Boston Corporation is fair. 1. Is Congoleum a good LBO candidate? In other words‚ does this company have a lot of debt capacity? The company was identified as a good LBO candidate as it had: (i) a minimal outstanding level of debt estimated at 5-7%; (ii)
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(Table of Contents) 1. 2. 3.LBO 4.TXU 5. LBO 6. (Overview of Leveraged Buyouts) (Mechanics of an LBO Analysis) (LBO Best Practices) (TXU Case Study) (LBO Modeling) (Homework Assignment) (Appendix) 1. Overview of Leveraged Buyouts (LBO) Overview of Leveraged Buyouts An LBO is the acquisition of a company or division of a company using debt for a majority of the purchase price and equity for the remainder. The buyer (the LBO Sponsor or Equity Sponsor) borrows the debt portion of
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Cbacbcdabcb 1. Suppose that the market price of Company X is $45 per share and that of Company Y is $30. If X offers three-fourths a share of common stock for each share of Y‚ the ratio of exchange of market prices would be: .667 1.0 1.125 1.5 2. The restructuring of a corporation should be undertaken if the restructuring can prevent an unwanted takeover. the restructuring is expected to create value for shareholders. the restructuring is expected to increase the firm’s revenue
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Why is the senior management of HCA pursuing an LBO of the firm? Prior to the LBO offer‚ HCA was suffering from poor market performance. The firm’s bad-debt expense was growing at a rate faster than anticipated. In 2005‚ uninsured emergency visits and uninsured admissions increased by 9.9% and 8.9% respectively‚ and it is estimated nationally that 85% of uninsured do not pay their medical bills. Moreover‚ the uninsured population was growing at a faster pace in the states HCA operated in than nationally
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Deutsche Bank‚ 2 Deutsche Bank Securities‚ 3 Intercontinental Capital‚ Ltd (ICL)‚ and 4 Consolidated Supply S.S. (CSSA). Each player has different role to play; thus‚ each of them faces with different responsibilities in the Leveraged Buyout (LBO) situation. Players | Responsibilities/ Problems | 1. Deutsche Bank | * Role: Provide funds to ICL in this leverage buyout * Problems: 1) must evaluate the risk whether ICL would be able to repay the loan and 2) In case that ICL defaults
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purpose of this executive memo is to evaluate the justification to invest in a potential LBO candidate‚ Acova Radiateurs‚ and estimate the possible bidding price‚ keeping the minimum annual return required by Baring Capital’s investors at 30%-35%. 1. Justification of the Potential Transaction We evaluate the prospects of Acova LBO transaction for Barings and come into a conclusion that Acova is a good potential LBO candidate is justified. a. Strong Cash Flow Generation Ability: Radiators manufacturing
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Module 5 Exercise C: Clothes Shopping To Wear and To Cost 1. Select the answer that best completes this sentence. Mi mamá lleva ____________. A. un traje y una corbata B. un vestido y unas sandalias C. un traje de baño y una corbata D. una sudadera y una corbata 2. Select the answer that best completes this sentence. Mi papá lleva ___________. A. un traje y una corbata B. un vestido y unas sandalias C. un traje de baño y una corbata D. una sudadera y una corbata 3. Select the
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Company History: The Goldman Sachs Group Inc.--the company changed its name from Goldman‚ Sachs & Co. after it went public in 1999--has been a respected player in world finance for more than 100 years. The company operates as a leading global investment banking and securities firm with two main divisions. The first division is Global Capital Markets‚ which includes investment banking‚ financial advisory services‚ trading‚ and principal investments. The second division is Asset Management and Securities
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Savannah Paterson FINAN Case Questions #5 Toys “R” Us LBO 1. What are the risks and merits of the transaction? This LBO transaction has both risk and profit potential. KKR‚ Bain‚ and Vornado Realty Trust face risk because the industry that Toys “R” Us (toys) is currently in‚ the retail toy industry‚ is in a decline. Industry sales have been down 4% in the last year‚ and analysts don’t have a positive projection for future sales in the US. This declining industry‚ and threat of new competitors
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