Consider Gentech, a company that is evaluating how large of an acquisition it could make without raising additional equity capital. By modifying the assumed purchase price and the acquisition multiple, answer the questions below:

1. Using the assumptions below, determine based on revenue, the largest company that Gentech can acquire without raising additional equity. Modify the dollar value of the acquisition to determine the resulting revenue size of the prospective acquisition.
2. If the acquisition multiple rises to 8.0Xs EBITDA, determine, based on revenue, the largest company that Gentech can acquire without raising additional equity.

Table 3.1. Genetech Assumptions

Financial information	Data
EBITDA margin	10.00%
Transaction multiple	7.00x
Senior debt limit as multiple of EBITDA	3.00x
Total debt max leverage	4.00x

**Input Acquiring company information in Column E, update date in cell E6 **Input acquisition size in row 4 Gentech LTM 12/31/12 Acquisition Amount) $25.0 Pro Forma 12/31/12 INPUTS COMMENTS $150.0 Revenue Acquired Revenue Pro Forma Revenue $150.0 35.7 10.00% Should be equal to acquiring company's EBITDA margin. $185.7 $15.0 EBITDA Acquired EBITDA Pro Forma EBITDA $15.0 3.6 7.00% EBITDA Multiple Based on comparable transactions. $18.6 $15.0 $15.0 25.0 Total Current Debt Acquisition Senior Debt Acquisition Second Lien/Sub Debt Pro Forma Total Debt 5.00x 4.00% Senior Debt Max Leverage Total Debt Max Leverage 0.0 $40.0 $50.0 $50.0 Shareholders' Equity Additional Equity Capital Required Pro Forma Shareholders' Equity 0.0 $50.0 1.00x Senior Debt/EBITDA Total Debt/EBITDA Debt/Capital 1.00x 2.15x 2.15x 44.4% 23.1% Purchase Price Target Company revenue **Input Acquiring company information in Column E, update date in cell E6 **Input acquisition size in row 4 Gentech LTM 12/31/12 Acquisition Amount) $25.0 Pro Forma 12/31/12 INPUTS COMMENTS $150.0 Revenue Acquired Revenue Pro Forma Revenue $150.0 35.7 10.00% Should be equal to acquiring company's EBITDA margin. $185.7 $15.0 EBITDA Acquired EBITDA Pro Forma EBITDA $15.0 3.6 7.00% EBITDA Multiple Based on comparable transactions. $18.6 $15.0 $15.0 25.0 Total Current Debt Acquisition Senior Debt Acquisition Second Lien/Sub Debt Pro Forma Total Debt 5.00x 4.00% Senior Debt Max Leverage Total Debt Max Leverage 0.0 $40.0 $50.0 $50.0 Shareholders' Equity Additional Equity Capital Required Pro Forma Shareholders' Equity 0.0 $50.0 1.00x Senior Debt/EBITDA Total Debt/EBITDA Debt/Capital 1.00x 2.15x 2.15x 44.4% 23.1% Purchase Price Target Company revenue