Question
The core of this assignment is to determine a fair valuation of the company and use that information to inform your decision about whether OutReach
The core of this assignment is to determine a fair valuation of the company and use that information to inform your decision about whether OutReach should accept Everest Partners offer. Part 1. Calculate the value of the company using the VC method. We covered this method during the semester. Use this method to calculate the percent equity stake. You will need to use a spreadsheet for this calculation. Be sure to highlight the key assumptions you make. Hint: use the forecast from Exhibit 1 and the comps from Exhibit 2. Prepare one using enterprise value/EBITDA and one using P/E Use both low and high target VC returns (the ones mentioned in the case) So, you will have four total. Now, how do those compare with the percent equity that Everest wanted? Try to back in to the Everest figure by altering some of your assumptions. Part 2. Calculate the value of the company using Discounted cash flow to get pre-money valuation. From that, calculate the equity stake given up. Assume the following: Use a risky period discount rate of 14% Use a stable period discount rate of 10% Use a perpetuity growth rate of 5% Part 3. What should Perez do? Use the results of your calculations in Parts 1 and 2 as well as other information in the case to answer this question. Deliverable: Perform your calculations for Parts 1 and 2 on a spreadsheet. Use separate tabs for each part. Summarize your results and answer Part 3 in a word document.
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