Based on the information attached, estimate the value of the Ossining Company.What is your your recommendations for negotiation strategy.

Ossining is a small, closely-held company that has been approached for a merger with a much larger company.The company needs to estimate its worth before entering negotiations. The company isseeking patents for several promising new productsand believes these will drive profitability for the near-term future.

The company has given you the following information to work on:

Revenue growth over the next five years are expected to be

Year 1

Year 2

Year 3

Year 4

Year 5

50%

35%

20%

20%

15%

Industry growth is around 3.5% but the company thinks their own long-term growth should be more robust.

Operating expense (without depreciation) is expected to be 65% of revenues

Depreciation is expected to be $500 a year through the projection period.

The average tax rate is 28%

The company has total debt of $7,100

The company has 1,500 shares outstanding, mostly held by the founders

Book equity is $10,000

The company beta is 1.85

The company anticipates capital expenditures and net working capital funding needs as shown below:

Year 1

Year 2

Year 3

Year 4

Year 5

Capital expenditures

$912

$820

$630

$550

$373

Change to NWC

$45

$36

$62

$21

$22

Information from the current Income Statement is summarized below:

Current

Revenues

$5,210

Operating Exp.

$2,855

Depreciation

$410

Operating Income

$1,945

Interest

$523

EBT

$1,422

Tax

$399

Net Income

$1,023

The company has bonds outstanding with a 7.5% coupon, maturing in 17 years.They are currently selling at 92.0% of par.

The risk-free rate is 1.20% and the return on the market is 10.20%.

The company's target capital structure is 30% debt and 70% equity.

Three companies similar to Ossining have been identified.Data on those companies is displayed here:

Mkt Cap

Debt

Shares Out

Price/Share

EBITDA

Book Eq

EPS

Wellington

$74,500

$22,350

1,000

$74.50

$6,679

$33,525

$6.01

Kaito

$28,910

$21,683

660

$43.80

$2,594

$8,673

$2.65

Masterfield

$103,480

$51,740

1,000

$103.48

$18,261

$72,436

$4.70

Develop a range of estimates for the company using all available methods and suggest a strategy for the company to enter negotiations. Include target price and BATNA.