You are assessing a potential acquisition for a client and your analyst informs you that the historic EBITDA multiple based on Public Comparables is 5.8 and the historic EBITDA multiple based on Precedent Transactions is 7.3. If the target is expecting EBITDA of $90 million, what are the valuations under each method? Can you rationalize the difference between the two?
Answer to relevant QuestionsA given market was initially segmented evenly among 20 firms (Phase 1). Five years later, the market was still segmented evenly among competing firms, but there were now only 10 firms (Phase 2). Eventually six firms emerged ...“A certain number of bankruptcies are good for the economy.” Discuss why you agree or disagree with this statement. Who would use Altman’s Z score to predict bankruptcy? Why would the ability to predict bankruptcy be useful to them? Compute the Z score for FAST Motor Company given the following information for year-end 2012: What proportion (measured as a percentage) of the Z score is composed of 0.60(X4)? Is FAST likely to go bankrupt in the near ...Conceptually, how do we determine the fair forward price for an asset? What are the necessary assumptions to arrive at a fair forward price?
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