You are an Associate at an M&A company and you are having lunch with the owner of a prospective target company. You want to try and determine whether she might want to sell the company at a fair market rate which happens to be a multiple of 6X earnings. After 3 years with your firm, you have the authority to agree to acquisitions of up to $1mm. The prospect shares that the company had a 'good year' last year and had $1.3mm of revenue with earnings of 10% and 'might sell, if her and her partner get a fair offer'. What else might be helpful for you to know if you can make a verbal offer for the business at the lunch?

A: Who owns the controlling shares of the company?

B: Is there any debt outstanding?

C: What are the future cash-flow projections?

D: Can you run a DCF model using the past 3 years financials?

E: A,B,C & D

F: A & B

G: C & D

Correct Answer: A & B