AirThread Connections - Valuation Case Study.

a. Describe which methodologies you would retain to value ATC, especially how you would value the cash-flows between 2008 and 2012? Then, how you would compute the terminal value after 2012? Finally how would you treat the non-operating investment in equity affiliates?

b. What discount rate would you use between 2008 and 2012 to value the unlevered free cashflows IFCF from 2008 to 2012? Is this the same discount rate that should be used for the Terminal Value? Justify;

c. How would you estimate the long-term growth rate that should be used to estimate ATC's Terminal Value? Using your estimate of long-term growth, what is the present value of ATC's going concern value?

d. Calculate the Value of the Tax Shield, considering ATC's maximum debt capacity, and earnings potential. Which discount rate would you use for the VTS, including the Cost of Financial Distress as well?

e. What is the total value of ATC before considering any synergies? And after considering any synergies? Should the buyer always pay (full value) for synergies?

f. Propose a valuation range for ATC taking into account the above incl. sensitivity analysis.