Question
IMAGINE YOU ARE the newly-appointed Chief Financial Officer (CFO) of A Corp. Inc., you've been tasked with valuing a potential merger with a fallen, once-competitive
IMAGINE YOU ARE the newly-appointed Chief Financial Officer (CFO) of A Corp. Inc., you've been tasked with valuing a potential merger with a fallen, once-competitive rival, B. LLC. If the acquisition price of B. LLC is "sufficiently attractive", then you'll be tasked later on (in this course) with ensuring that all of the necessary, high-level financial requirements for executing this merger are in place. While many methods exist to value companies such as a "comparables/multiples" approaches, "liquidation value" approaches, and "replacement cost" approaches, B. LLC has about seven years of unaudited financial statements from which Free Cash Flows can be estimated, discounted, and then added to arrive at the company value. Your group's task in this analysis is to come up with the preliminary considerations necessary to understand discounting (read: time value of money) as well as some of the (possibly missing) information you'll need to find the value of B. LLC.
PLEASE ANSWER THE FOLLOWING QUESTIONS : (there are No wrong answers so please just tell me what you would do if you were the CFO of this company, it is just to give me an idea on how to complete the rest of the homework)
(1) Question at Hand
(2) Information Given {data, facts, observations, experiences}
(3) Assumptions {explicit or implicit/understood}
(4) Concepts {theories, definitions, laws, models, methods, methodologies}
(5) Calculations Necessary {actual number crunching and end results}
(6) Interpretation {conclusions, solutions}
(7) Implications and Consequences {what is the end result, unintended consequences?}
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