After twelve (12) years, your business is wildly successful with multiple locations throughout the region. You are now ready to think really big. You want to purchase a huge competitor. (Note: You determine whether the competitor is a privately or publicly held company.) To expand, you will need additional capital from the debt or equity market, or both.
Write a five to seven (5-7) page paper in which you:
- Use one (1) of the valuation techniques identified in Chapters 10 and 11 to calculate the value of the competitor you wish to purchase. Authorized Valuation Techniques: Basic Venture Capital Valuation Method; Pre Money and Post Money Valuation; Direct Comparison Method; or Direct Capitalization Method. Note: You will have to make assumptions; however, your assumptions need to be rationally supported.
- Analyze the various financial tools available to you to determine the tools that will be most helpful in assessing whether your company can afford to purchase the competitor. Support your response. Imagine you can indeed afford to purchase the competitor; however, you will need an additional $100 million.
- Examine the options available to you to finance the competitor through the debt market, recommending the best alternative as a result of your analysis. Provide support for your recommendation.
- Examine the options available to you to finance the competitor through the equity market, recommending the best alternative as a result of your analysis. Provide support for your recommendation.
- Conduct a cross comparison of your debt and equity examinations to determine where to ideally obtain the additional $100 million funding needed to make the purchase and the approach that you would take to securing the funds. Provide support for your recommendation.
ANSWER:
Since its inception twelve years ago, the travel firm has expanded its operations to include regional offices and grown its market share. The firm has recorded improved financial performance. The organization has invested in initiatives that will maximize profit. It is planning on purchasing one of its competitors, G Adventure, to increase its market presence. G Adventure is a renowned travel company with twenty-eight offices across the world and which organizes events in more than a hundred countries. It was started in 1990 and has enjoyed a competitive advantage in various aspects of the travel industry.
The value of G Adventures will be determined through the basic venture capital valuation method. The approach is based on the premise that investors will ….
Assuming that G Adventures terminal value is US$3 billion and the …
Arriving on a final verdict on whether my travel firm can afford to purchase G Adventures requires consideration of pertinent financial tools – balance sheet, profit and loss statement, and cash budget. A balance sheet … To continue reading, click on the button below and purchase complete answer.