Question
Shin-up is a social media site that is growing in popularity. The firm has been around for a few years and has created a nice
Shin-up is a social media site that is growing in popularity. The firm has been around for a few years and has created a nice market niche for itself. Now the company has a possible buyer who has made an offer. The CEO of Shin-up is your friend and has asked for your help in calculating the value of the company by using relative valuation with multiples from comparable companies. Last years Sales for Shin-up was $645 million and they had an EBITDA of $96.75 million.
Using the data provided below, what is your estimate of the Price for Shin-up using the EBITDA multiple?
For that, you have collected the following data on social media companies:
| PRECEDENT TRANSACTIONS ANALYSIS |
|
|
| ||
| All figures are in $000's |
|
|
|
|
|
| Target Company | Date | Sales | EBITDA | EBITDA/Sales | Price |
| AAA | 2008 | $1,200,000 | $312,000 | 26.00% | $3,744,000 |
| ZZZ | 2009 | $800,000 | $144,000 | 18.00% | 1,584,000 |
| LLL | 2012 | $5,600,000 | $336,000 | 6.00% | 3,024,000 |
| DDD | 2016 | $480,000 | $67,200 | 14.00% | 672,000 |
| CCC | 2019 | $975,000 | $87,750 | 9.00% | 702,000 |
a.$645 million
b.$967.5 million
c.$1,945.2 million
d.$189.39 million
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The Complete Guide To Option Selling How Selling Options Can Lead To Stellar Returns In Bull And Bear Markets
Authors: James Cordier , Michael Gross
2nd Edition
0071733485
