KKR is thinking of listing a portfolio company, Dollar General, in an IPO offering KKR owns 60% of Dollar General, with the founder and his family owning the remaining 40% Goldman Sachs in the investment banker handling the IPO. Your job is to value Dollar General for its IPO, using the data below on Dollar General, and and Dollar Tree, the closest publicly traded comp. After the IPO, there will be 1,000 shares total shares outstanding KKR will reduce its ownership to 30% (that is, they will sell half their stake in the IPO). The founder will not sell any shares in the IPO 1 1 2 Nm 2 3 37 6 Questions: VA Sition What is the implied EV of Dollar General using OLTR EV/EBITDA valuation? 1.533917683 What is the implied market cap of Dollar General using DLTR EV/EBITDA? 51298.4829 What EV/EBITDA multiple did you apply to derive your valuation? rprise Value / EBITDA Valuation B What is the EV of Dollar General using DLTR EV/Revenue valuation? 1.046429701 What is the market cap of Dollar General using DLTR EV/Revenue? 51298.4829 What Ev/Revenue multiple did you apply to derive your valuation?rprise Value / EBITDA IPO Price Range Based on these two valuations, what is IPO price range of 1 share of DG? $21 Hint: The price range are between the 2 values you just derived. Goldman Sachs recommends pricing the shares at the midpoint of the range. What is the IPO Price? $7.50 How many shares will KKR own after the IPO? How many shares will the family own? How many shares will the public own? KKR $22 Founder $78.50 Public $48 19 10 32 32 33 34 35 36 7 8 9 10 37 38 Short Answer question: 11 Looking at DG revenue growth and EBITDA% VS DLTR in FY2020, what comments can you make about the DG Treative to DLTR? Looking at the leverage ratio (Net Debt/EBITDA), what can you say about the riskiness of DG balance sheet versus DLTR? 12 doc GA88 41 DLTREV EBITDA 4025 2624 Outstanding shares share price 231.69 22141 OLTREV EBITDA 4010 1528 Outstanding share price 231.69 221.41 DOLLAR TREE DOLLAR GENERAL FY 2020 IPO 683 1829 TDA Ticker Symbol Fiscal year Revenues EBITDA FY2018 22,823 2.408 Comp Dollar Tree DLTR EY2019 EY 2020 23,610 25,509 2,220 2,600 Ticker Symbol Revenues EBITDA EY2018 25,625 2,570 FY2019 25,754 2,806 DG 33,746 4,128 9701 4829 ITDA Capital Structure Gross Debt Cash Net Debt Market Cap of Equity Enterprise Value 34762 11416.71 2,059.5 311868 40.118 Capital Structure Gross Deb Cash Net Debt Market Cap of Equity Enterprise Value 3,466.0 1240 31 3,225.7 51.3028 65438 $21 7.50 Shares o/s (in millions) Stock Price 2245 138.5 Shares o/s (in millions) IPO Stock Price 25000 $21 $22 8.50 $48 Net Debt/EBITDA EBITDA Margin % 2020/2019 Revenue Growth 2019/2018 Revenue Growth EV/EBITDA EV/Sales 5,3 9.8% 2.60% 1.7% 153 15 Net Debt/EBITDA EBITDA 2020/2019 Revenue Growth 2019/2018 Revenue Growth EV/EBITDA EV/Sales 6.8 10.0% 9.18% 9.0% 16.69 1.93 row Page Layout Formulas Data Review View Tell me Good Net Calibrl (Body) P lad 10 ' General 2 Wrap Text Desk Cell B TV $ - % Merge & Center Einut 9 -4 Conditional Format Formatting et Table Jx Dollar General is now listed as a public company. Dollar General decides to buy a small regional chain of dollar stores, Mountain States Dollar (MSD). After negotiations, Mountain States agrees to sell itself for 12x EBITDA, 65.43B 31.1868 23000 Questions How much in total will Dollar General be paying for MSD? That is what is the EV? Dollar General will find the purchase 30% in cash and 70% in stock. How much cash will Dollar General need to pay? Assume Dollar general shares are trading at $60 after the announcement of the deal. How many shares will Dollar General have to issue? Moutain States Dollar Revenue EBITDA FY2020 5,125 424 Before Deal - MSD 1,050 Net Debt Market cap EV 31 1,081 100 32.40 MSD Shares o/s (in millions) MSD Stock Price 2020/2019 Revenue Growth 2019/2018 Revenue Growth 6.0% - 1.0% EV/EBITDA EBITDAX EV 1.7% 15.3 1.5 Net Debt Market cap EV Transaction Value - MSD $272 51.302B 65.43B MSD Shares o/s (in millions) MSD Stock Price 2245 9.07 KKR is thinking of listing a portfolio company, Dollar General, in an IPO offering KKR owns 60% of Dollar General, with the founder and his family owning the remaining 40% Goldman Sachs in the investment banker handling the IPO. Your job is to value Dollar General for its IPO, using the data below on Dollar General, and and Dollar Tree, the closest publicly traded comp. After the IPO, there will be 1,000 shares total shares outstanding KKR will reduce its ownership to 30% (that is, they will sell half their stake in the IPO). The founder will not sell any shares in the IPO 1 1 2 Nm 2 3 37 6 Questions: VA Sition What is the implied EV of Dollar General using OLTR EV/EBITDA valuation? 1.533917683 What is the implied market cap of Dollar General using DLTR EV/EBITDA? 51298.4829 What EV/EBITDA multiple did you apply to derive your valuation? rprise Value / EBITDA Valuation B What is the EV of Dollar General using DLTR EV/Revenue valuation? 1.046429701 What is the market cap of Dollar General using DLTR EV/Revenue? 51298.4829 What Ev/Revenue multiple did you apply to derive your valuation?rprise Value / EBITDA IPO Price Range Based on these two valuations, what is IPO price range of 1 share of DG? $21 Hint: The price range are between the 2 values you just derived. Goldman Sachs recommends pricing the shares at the midpoint of the range. What is the IPO Price? $7.50 How many shares will KKR own after the IPO? How many shares will the family own? How many shares will the public own? KKR $22 Founder $78.50 Public $48 19 10 32 32 33 34 35 36 7 8 9 10 37 38 Short Answer question: 11 Looking at DG revenue growth and EBITDA% VS DLTR in FY2020, what comments can you make about the DG Treative to DLTR? Looking at the leverage ratio (Net Debt/EBITDA), what can you say about the riskiness of DG balance sheet versus DLTR? 12 doc GA88 41 DLTREV EBITDA 4025 2624 Outstanding shares share price 231.69 22141 OLTREV EBITDA 4010 1528 Outstanding share price 231.69 221.41 DOLLAR TREE DOLLAR GENERAL FY 2020 IPO 683 1829 TDA Ticker Symbol Fiscal year Revenues EBITDA FY2018 22,823 2.408 Comp Dollar Tree DLTR EY2019 EY 2020 23,610 25,509 2,220 2,600 Ticker Symbol Revenues EBITDA EY2018 25,625 2,570 FY2019 25,754 2,806 DG 33,746 4,128 9701 4829 ITDA Capital Structure Gross Debt Cash Net Debt Market Cap of Equity Enterprise Value 34762 11416.71 2,059.5 311868 40.118 Capital Structure Gross Deb Cash Net Debt Market Cap of Equity Enterprise Value 3,466.0 1240 31 3,225.7 51.3028 65438 $21 7.50 Shares o/s (in millions) Stock Price 2245 138.5 Shares o/s (in millions) IPO Stock Price 25000 $21 $22 8.50 $48 Net Debt/EBITDA EBITDA Margin % 2020/2019 Revenue Growth 2019/2018 Revenue Growth EV/EBITDA EV/Sales 5,3 9.8% 2.60% 1.7% 153 15 Net Debt/EBITDA EBITDA 2020/2019 Revenue Growth 2019/2018 Revenue Growth EV/EBITDA EV/Sales 6.8 10.0% 9.18% 9.0% 16.69 1.93 row Page Layout Formulas Data Review View Tell me Good Net Calibrl (Body) P lad 10 ' General 2 Wrap Text Desk Cell B TV $ - % Merge & Center Einut 9 -4 Conditional Format Formatting et Table Jx Dollar General is now listed as a public company. Dollar General decides to buy a small regional chain of dollar stores, Mountain States Dollar (MSD). After negotiations, Mountain States agrees to sell itself for 12x EBITDA, 65.43B 31.1868 23000 Questions How much in total will Dollar General be paying for MSD? That is what is the EV? Dollar General will find the purchase 30% in cash and 70% in stock. How much cash will Dollar General need to pay? Assume Dollar general shares are trading at $60 after the announcement of the deal. How many shares will Dollar General have to issue? Moutain States Dollar Revenue EBITDA FY2020 5,125 424 Before Deal - MSD 1,050 Net Debt Market cap EV 31 1,081 100 32.40 MSD Shares o/s (in millions) MSD Stock Price 2020/2019 Revenue Growth 2019/2018 Revenue Growth 6.0% - 1.0% EV/EBITDA EBITDAX EV 1.7% 15.3 1.5 Net Debt Market cap EV Transaction Value - MSD $272 51.302B 65.43B MSD Shares o/s (in millions) MSD Stock Price 2245 9.07