Using the M&A Valuation & Deal Structuring Model Accompanying This

question 51

Short Answer

Using the M&A Valuation & Deal Structuring Model accompanying this text:
a. On the Valuation Worksheet, note the enterprise and equity values for Newco.
b. On the Summary Worksheet under Incremental Sales Synergy, change incremental
revenue by $200 million in the first year and $250 million in the second year and
$350 in the third year.
What is the impact on Newco’s enterprise and equity values? (Hint: See Valuation Worksheet)
Close model but do not save results.

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Definitions:

Portfolio of Risky Securities

A collection of investments that contain a degree of risk, with the expectation of achieving higher returns compared to risk-free assets.

Weighted Sum

A mathematical technique where each component is multiplied by a factor reflecting its importance before their sum is computed.

Variance of Returns

A measure of the dispersion of returns for a given security or market index, typically used to gauge the risk associated with a particular investment.

Covariance of Returns

A measure used in finance to assess how two investments move in relation to each other over a period.