Financial Modelling and Business Valuation – Merger Analysis
Situation
A US-headquartered IB firm wanted support on valuing a US-based packaged Juice manufacturing company.
The Project involved doing a merger analysis of two entities followed by valuation across various methodologies.
JMI Implementation
Understood the business structure of two entities from the management to create a business model.
Forecasted a 5 year quarterly model with separate financial statements for each of the two entities and subsequently merged the financials to form a merger model.
Calculated the synergies and impact on the capital structure of the merger entity.
JMI team examined that the merger would result in saving operational cost of c.$4M and also bring monopoly in the market.
Valued the company with DCF method and market based approach including company comparable (EV/EBITDA, EV/Adj. EBITDA and P/E multiples) and precedent transaction.
Value Delivered
The output involved a financial model with different scenarios (Base, upside and downside), Sensitivity and football field analysis.
Figured out the post-merger valuation of company at EV/Adj. EBITDA multiple of 4.2x through Football field analysis.
