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You are interested to acquire the following private equity firm. The private firm operates in Australia and its main business is in biotechnology. The current

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You are interested to acquire the following private equity firm. The private firm operates in Australia and its main business is in biotechnology. The current revenue is $9,500,000 per year. Given that it is a growing company, you think that the company's revenue would grow to 8% every year over the next five years. Make a choice on what revenue growth rate you wish to use. You would fund your purchase with 50% debt and the remaining with equity. As a seasoned private equity investor, you would pay an EBITDA multiple of 10.5 for the company. Based on the information provided by the firm, since COVID-19 the EBITDA margin has dropped to 10% in the most recent financial statement. You also believe that by actively managing the company, you would be able to grow the EBITDA margin by 2% for each of the next five years. The initial fees and expenses associated with the acquisition are $2,400,000. You have an exit strategy of five years and would sell the company after five years at the same EBITDA multiple you chose above. Assume that interest rate is 5.5%, the yearly capital expenditure is $1,100,000 and the tax rate is 30%. Assume you decide to invest in the business. In 100150 words, briefly explain the due diligence that you would conduct before finalizing the deal

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