Framedia

1.What are the alternatives that Framedia faced at the time of the case? What are the considerations for and against each of one of the alternatives?

2.What alternatives did Focus Media have at the time? What would be an appropriate valuation for the proposed acquisition deal? Why?

3.What strategic considerations might have prompted the outdoor advertising market in China to consolidate so quickly? What role might the private equity investors have played in the maturing of the market?

4.What is the stand-alone valuation of Framedia at the end of 2005?

Please use a 30% discount rate, a 35% tax rate and extend the cash flows until the end of 2008. Assume an exit Free Cash Flow multiple of 13 (i.e. calculate terminal value not based on the formula we saw in class but as an exit multiple, i.e. 13 X 2008 Free Cash Flow.)Also, when you read the financial statement keep in mind that Profits from Operation = EBIT. Finally, calculate NWC as Cash + Inventories + Accounts Receivable - Accounts Payable.