MERGER and LBO VALUATION MODEL

NOTE: Complete unshaded cells, only. Shaded cells contain formulae that populate automatically.

ESTIMATE THE TOTAL COST OF THE DEAL

Price per share=

Debt Outstanding Currently (mil)=

# Shares Outstanding (mil)=

Other Costs (Investment Banker, etc.)=

Total Cost of the Deal=

DEFINE HOW THE DEAL WILL BE FINANCED

REPAYMENT SCHEDULE ( as % of principal)

Interest rate on debt remaining in terminal year=

Suggestion: For the first run, enter an arbitrary schedule; Check cashflows to equity; Modify schedule;

DEFINE RATES OF FUTURE GROWTH

Depreciation (See below)

Cap. Spending (See below)

Working Cap : % of Revenue

COGS: % of Revenues

Default values= If you do not enter rates, the growth rates in depreciation, capital spending = growth rate in revenues.

The default values for COGS and Working Capital come from Step 6 below.

GENERAL INFORMATION

Current T.Bill rate=

Market Risk Premium=

Ordinary Tax Rate=

Current Beta of Firm=

SPECIFY ASSETS TO BE SOLD (Enter the year in which assets will be sold and market value and CF to the firm from those assets)

Assets sold: Mkt. Value

Assets sold: Revenues

Assets sold: COGS (%)

Assets sold: Depreciation

Assets sold: Capital Spending

[ Enter the market value of the asset sold; Enter the EBIT, Depreciation and Capital Spending of the asset; Only in the year sold]

ENTER INFORMATION ON CURRENT INCOME STATEMENT

COGS as % of Revenue=

(Default = 1 - (EBIT+Depreciation)/Revenues)

Current Capital Spending=

Working Cap. as % of Revenues=

Current Deprec'n=

Interest rate on Debt Currently=

CASHFLOWS FROM LBO

Term Value of Equity=

Term Value of Firm=

CAPITAL STRUCTURE AND COSTS OF EQUITY/CAPITAL