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Sobchak Security Corp (SSC) is trying to value their own stock for a potential sale to a strategic buyer. SSC recently reported the following financial
Sobchak Security Corp (SSC) is trying to value their own stock for a potential sale to a strategic buyer. SSC recently reported the following financial data: Profit Margin = 9.5%; Return on Equity = 17.9%; Asset Beta = 1.25; D/E Ratio = 2.00 SSC's industry rivals have the following characteristics: = The Dude and Associates: Profit Margin = 10.7%; Return on Equity = 17.6%; Asset Beta = 1.35; D/E Ratio = 2.25; Price to Sales = 0.99 = = Nihilist Security: Profit Margin = 9.3%; Return on Equity = 18.1%; Asset Beta = 1.19; D/E Ratio - 1.98; Price to Sales = 0.62 = - = Jackie Treehorn's Video Monitoring: Profit Margin = 2.2%; Return on Equity = 35.9%; Asset Beta 3.50; D/E Ratio = 7.00; Price to Sales = 2.39 None of the firms in this industry pay any dividends. If SSC has Sales of $90.5 million and 6 million shares outstanding, what should their reservation price (i.e., equity valuation) be in this potential acquisition
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