30257 Corporate Valuation - 2020 Group Assignment Instructions v5 PDF

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2020 assignment...

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30257 Corporate Valuation AY 2020 / 2021

Corporate Valuation

Group Assignment Your group is given a target company, and a role in a hypothetical M&A deal. Suppose the company is currently owned by a private equity firm, Sell Capital, which is selling the target company. The selling PE is negotiating with another PE firm, Buy Capital, which is interested in acquiring the target.  If you are assigned the sell side role, you are an Analyst at the investment bank advising Sell Capital.  If you are assigned the buy side role, you are an Analyst at the investment bank advising Buy Capital. Your task is to prepare a presentation on valuation considerations on the target that you will share with the counterparty and use as negotiation backup material. Specifically, you are asked by your Director to: 1. Present a brief description of the company’s business model and of its industry’s outlooks. Focus on positioning the company within its industry’s value chain. Suggested length: 1 slide. 2. Reorganize and analyze the historical balance sheet (BS) and income statement (IS) and build a cash flow (CF) statement and the most important ratios. Suggested length: 2 slides (including tables/charts). 3. Starting from the reorganized financials, choose the main assumptions that will be used to forecast the BS and the IS and describe them. Use company press releases, the Investors Relation section of their website and other publicly available sources. Suggested length: 2 slides. 4. Apply the chosen assumptions in an Excel financial model in order to build the company business plan (at least 3 years). Briefly comment on the outputs. Suggested length: 2 slides (including tables/charts) (a potential difference in the quality & quantity of available sources will be taken into account while grading). 5. Compute the weighted average cost of capital, carefully showing your sources and assumptions (e.g. on risk free rate, beta, market risk premium, leverage, tax rate, spread on debt…). Suggested length: 1 slide. 6. Choose appropriate comparable companies and compute two forward +1 (current FY) multiples of your choice. Suggested length: 1 slide. 7. Value the company with a DCF asset side and with the two chosen multiples. The valuation date should be as of the closing of the last historical fiscal year. Describe items between enterprise value and equity value and, finally, compare results and propose your valuation to the buyer / seller. Suggested length: 2 slides (including tables/charts). Assume that neither of the two PEs have other investments in businesses in the same industry as the target’s. Therefore any analysis and valuation will be carried on a standalone basis, i.e. neglecting any kind of synergy. You are nonetheless supposed to take into consideration the best interest of your client /your side in the deal. General instructions     

Groups are required to submit a PowerPoint report of a maximum of 12 slides of content (i.e. excluding cover and dividers) (as a PDF) and the Excel financial model by the deadline posted on Blackboard. Deliverables will have to be submitted through Blackboard > Materials. The website allows to upload files once only therefore please include all files at once. No emailed deliverables will be accepted. Grading will both consider the quality of the class presentation and of the PDF report (the Excel model won’t be directly graded as itself; it serves as a source / backup for information on the slides. Cases of serious free-riding or other disputes can be reported to the Course instructor, which will evaluate consequences on the final grade for the involved group members. Groups can choose the speaking members of the team. All group members are supposed to attend (for extenuating circumstances, instructors will consider excuses on a case-by-case basis).

Presentations  

Each group will be given 10 minutes to present. No additional time will be allowed, therefore anticipate and focus on the most relevant issues. For each company’s section, the following agenda will be followed: 1. The buyer presents (10 minutes); 2. The seller replies / challenges the buyer’s presentation (5 minutes); 3. The seller presents (10 minutes); 4. The buyer replies / challenges the seller’s presentation (5 minutes).

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30257 Corporate Valuation AY 2020 / 2021

Companies and groups

Groups Class 31 Company

Ticker

Industry

Date

Buy side

Sell side

Eni SpA

BIT:ENI

Energy

A2A SpA

BIT:A2A

Energy

18/11/2020

1

2

18/11/2020

3

4

Essilorluxottica SA

EPA:EL

De'Longhi SpA

BIT:DLG

Consumers

20/11/2020

5

Consumers

20/11/2020

7

Brunello Cucinelli SpA Salvatore Ferragamo SpA

BIT:BC

Fashion

25/11/2020

BIT:SFER

Fashion

25/11/2020

Ferrari NV

NYSE:RACE

Automotive

27/11/2020

Piaggio & C. SpA

BIT:PIA

Automotive

27/11/2020

Technogym SpA

BIT:TGYM

Sports

Juventus Football Club SpA

BIT:JUVE

Sports

Time

Groups Class 32 Buy side

Sell side

Time

8:30 - 10:00

21

22

10:20 - 11:50

8:30 - 10:00

23

24

10:20 - 11:50

6

8:30 - 10:00

25

26

10:20 - 11:50

8

8:30 - 10:00

27

28

10:20 - 11:50

9

10

8:30 - 10:00

29

30

10:20 - 11:50

11

12

8:30 - 10:00

31

32

10:20 - 11:50

13

14

8:30 - 10:00

33

34

10:20 - 11:50

15

16

8:30 - 10:00

35

36

10:20 - 11:50

02/12/2020

17

18

8:30 - 10:00

37 & 38

39

10:20 - 11:50

02/12/2020

19 & 20

40

8:30 - 10:00

2...