Based on the financial information and assumptions in Exhibit 3, undertake a LBO valuation for Bottomline Technologies, identifying the IRR that will be generated on equity assuming an exit in year 5. Outline the assumptions used in your calculations and explain your workings

The income statement is there?? What else do u need?

Balance Sheet (in millions) 2018 $'m 2017 $'m ASSETS Current assets: Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment, net Other long-term assets Total Assets 1,783 1,830 702 4,315 2,616 679 7,610 1,370 1,873 742 3,985 2,850 638 7,473 421 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of debt Accounts payable Accrued expenses and other current liabilities Income taxes payable Total Current Liabilities 65 1,243 1,113 32 2,453 1,112 979 23 2,535 Long-term liabilities: Long-term debt Lease incentives and other long-term liabilities Total Long-term liabilities 1,248 1,005 2,253 1,310 1,083 2,393 20 Stockholders' equity: Common stock $0.05 par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity 20 81 2,749 54 2,904 2,440 85 2,545 Total Liabilities and Equity 7,610 7,473 Balance Sheet (in millions) 2018 $'m 2017 $'m ASSETS Current assets: Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment, net Other long-term assets Total Assets 1,783 1,830 702 4,315 2,616 679 7,610 1,370 1,873 742 3,985 2,850 638 7,473 421 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of debt Accounts payable Accrued expenses and other current liabilities Income taxes payable Total Current Liabilities 65 1,243 1,113 32 2,453 1,112 979 23 2,535 Long-term liabilities: Long-term debt Lease incentives and other long-term liabilities Total Long-term liabilities 1,248 1,005 2,253 1,310 1,083 2,393 20 Stockholders' equity: Common stock $0.05 par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity 20 81 2,749 54 2,904 2,440 85 2,545 Total Liabilities and Equity 7,610 7,473 Exhibit 2 (continued) Bottomline Technologies Case Study - Forecast Assumptions for DCF The current historical financial information is a good starting point for building your DCF forecast and subsequent equity valuation. Knowing that you are new to the role your VP (Vice President) on the LBO desk has sent you an e-mail with the following key points with reference to the forecast assumptions for Bottomline Technologies. The key points include: Although sales growth has been negative in the past couple of years it has been anticipated that with the experience of the LBO team, new operational management for Bottomline Technologies and access to wider markets, sales can now be expected to grow by 20% per annum. The EBIT margin will maintain at the current 2018 level for the foreseeable future. The effective tax rate for 2018 can be applied in the calculation of all forecasted NOPAT numbers (Net Operating Profit After Tax). Historically Capital Expenditure (CAPEX) has been $524 (2018), $726 (2017) and $ 714 (2016) and will be expected to remain at the 2018 level as a % of Sales for the foreseeable future. Depreciation in 2018 was $593 and this is also expected to remain as the same relative % of sales in 2019 and beyond. An anticipated 5% of sales for investment in working capital is expected annually from 2019 and beyond. Post the 5 year forecast period there is expected to be wider competition in the cloud computing market and it is anticipated that Free Cashflows from year 5 onwards will at a rate of 7% in perpetuity. For DCF valuation purposes 3M uses an initial WACC of 10% to evaluate potential target companies. Exhibit 3 Bottomline Technologies Case Study - Leveraged Buyout (LBO) Assumptions The directors of 3M are keen to finance the acquisition of Bottomline Technologies with a large proportion of debt and would like to model the expected IRR on initial equity assuming an exit after year 5. The following assumptions should be used in your LBO valuation: Transaction comparable information suggests that an entry multiple of 7 times 2018 EBIT would be a good proxy valuation for the Bottomline Technologies on a LBO basis. The debt on the 2018 balance sheet of Bottomline Technologies will be refinanced on the acquisition. Directors of 3M anticipate using 70% Debt and 30% Equity to finance the acquisition. The debt financing has been structured in a manner to achieve a repayment schedule of $500m per annum from year 1. With the exit multiple not expected to expand and the earliest exit expected in year 5, the directors of 3M would like to know whether the acquisition of Bottomline Technologies would meet their expected 45% return on equity capital. Balance Sheet (in millions) 2018 $'m 2017 $'m ASSETS Current assets: Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment, net Other long-term assets Total Assets 1,783 1,830 702 4,315 2,616 679 7,610 1,370 1,873 742 3,985 2,850 638 7,473 421 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of debt Accounts payable Accrued expenses and other current liabilities Income taxes payable Total Current Liabilities 65 1,243 1,113 32 2,453 1,112 979 23 2,535 Long-term liabilities: Long-term debt Lease incentives and other long-term liabilities Total Long-term liabilities 1,248 1,005 2,253 1,310 1,083 2,393 20 Stockholders' equity: Common stock $0.05 par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity 20 81 2,749 54 2,904 2,440 85 2,545 Total Liabilities and Equity 7,610 7,473 Balance Sheet (in millions) 2018 $'m 2017 $'m ASSETS Current assets: Cash and cash equivalents Inventory Other current assets Total current assets Property and equipment, net Other long-term assets Total Assets 1,783 1,830 702 4,315 2,616 679 7,610 1,370 1,873 742 3,985 2,850 638 7,473 421 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of debt Accounts payable Accrued expenses and other current liabilities Income taxes payable Total Current Liabilities 65 1,243 1,113 32 2,453 1,112 979 23 2,535 Long-term liabilities: Long-term debt Lease incentives and other long-term liabilities Total Long-term liabilities 1,248 1,005 2,253 1,310 1,083 2,393 20 Stockholders' equity: Common stock $0.05 par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity 20 81 2,749 54 2,904 2,440 85 2,545 Total Liabilities and Equity 7,610 7,473 Exhibit 2 (continued) Bottomline Technologies Case Study - Forecast Assumptions for DCF The current historical financial information is a good starting point for building your DCF forecast and subsequent equity valuation. Knowing that you are new to the role your VP (Vice President) on the LBO desk has sent you an e-mail with the following key points with reference to the forecast assumptions for Bottomline Technologies. The key points include: Although sales growth has been negative in the past couple of years it has been anticipated that with the experience of the LBO team, new operational management for Bottomline Technologies and access to wider markets, sales can now be expected to grow by 20% per annum. The EBIT margin will maintain at the current 2018 level for the foreseeable future. The effective tax rate for 2018 can be applied in the calculation of all forecasted NOPAT numbers (Net Operating Profit After Tax). Historically Capital Expenditure (CAPEX) has been $524 (2018), $726 (2017) and $ 714 (2016) and will be expected to remain at the 2018 level as a % of Sales for the foreseeable future. Depreciation in 2018 was $593 and this is also expected to remain as the same relative % of sales in 2019 and beyond. An anticipated 5% of sales for investment in working capital is expected annually from 2019 and beyond. Post the 5 year forecast period there is expected to be wider competition in the cloud computing market and it is anticipated that Free Cashflows from year 5 onwards will at a rate of 7% in perpetuity. For DCF valuation purposes 3M uses an initial WACC of 10% to evaluate potential target companies. Exhibit 3 Bottomline Technologies Case Study - Leveraged Buyout (LBO) Assumptions The directors of 3M are keen to finance the acquisition of Bottomline Technologies with a large proportion of debt and would like to model the expected IRR on initial equity assuming an exit after year 5. The following assumptions should be used in your LBO valuation: Transaction comparable information suggests that an entry multiple of 7 times 2018 EBIT would be a good proxy valuation for the Bottomline Technologies on a LBO basis. The debt on the 2018 balance sheet of Bottomline Technologies will be refinanced on the acquisition. Directors of 3M anticipate using 70% Debt and 30% Equity to finance the acquisition. The debt financing has been structured in a manner to achieve a repayment schedule of $500m per annum from year 1. With the exit multiple not expected to expand and the earliest exit expected in year 5, the directors of 3M would like to know whether the acquisition of Bottomline Technologies would meet their expected 45% return on equity capital