$$

Excel Practice

$1$ Based on the information provided in "DuPint Valuation" sheet, calculate:

a$)$ The Unlevered EV of DuPint, assuming that after $2016$ financial cash flows will perpetually grow at $2\%$

b$)$ The Unlevered EV of DuPint, assuming that in $2016$ the TV multiple will be $6$x EBITDA

c$)$ The Unlevered EV of DuPint, assuming that in $2016$ the TV multiple will be $2\mathrm{.}5$ Sales

$2$ Suppose a PE firm is interested in acquiring DuPint, and will do the following:

$-$improve EBIT margins from $10\%$ to $12\%$

get $$3\mathrm{.}9$ billion million$)$ in debt at the close of $2011$ to fund the acquisition

$2$A Calculate the maximum that the PE firm will be willing to pay for DuPint under the following scenarios:

i$)$ The PE firm will do a cash sweep, i$.$e$.$ use all available funds towards paying down the principal, and will exit its investment by selling the firm at $6\mathrm{.}5$ EBITDA

iii$)$ Redo ii$)$ assuming that the PE firm will pay down the principal by only $$100$ million each year over the next $5$ years. Does your answer change? Why, or why not?

iv$)$ How $($if at all$)$ would your answer to $($iii$)$ change if you were told that equity holders $($limited partners$)$ in the PE fund require a rate of return of $25\%$ on their equity investment?

$2$B Suppose the limited partners have to put in $$750m$ to fund the acquisition. Making the same assumptions as in $($iii$)$ above, calculate the IRR that the limited partners would make on their equity investment.

$2$C Making the same assumptions as in $2A($iii$)$ above, $[$use the recursive FTE approach to$]$ calculate the equity holders' "true" required rate of return in each year. How $($if at all$)$ does this impact your answer to $2A($iv$)$ above?

Practice Problems

DuPint Valuation

Select destination and press ENTER or choose Paste

$\backslash$table$[[A,$B$,$c$,$D$,E,F,$G$,$H$,$I$],[1,$DuPint Performance Coatings$],[\frac{2}{3},$Metric,$2011,$Closing,$2012F,2013E,$Projected,$2015F,2016F$