FINANCIAL ANALYSIS EXAM - RMAG case

1
FINANCIAL ANALYSIS EXAM- RMAG case

• Students
• Domagoj Kovacic
• Ivica Stipovic
• Filip Ljubic
• Robert Cuzela Piljac
• Marko Kucic

2
Assumptions

• the company uses no dept financing MV of depts
  0
• if Economic value MV of assets MV of depts
  MV of equity, then
• Economic value MV of assets MV of equity
  Total present value

3
Maximum price Big Sur must pay

• RMAG owners proposed to sell 90 of equity for
  46 million
• if 46 m 90 then 100 51,1 m
• RMAG MV of equity 51,1 m Total present value
• from exhibit 6 the RMAG Total present value of
  52 m is calculated with approx. 5 annual growth
  rate

4
Maximum price Big Sur must pay

• from exhibit 6 the Big Sur 5 growth rate results
  with a Total present value of 35 m
• 90 of 35 m 31,5 m

5
Price Big Sur should offer

• assumption growth rate (g) US inflation rate
  3, or
• historical growth rate based on positive FCF of
  forecast (last 3 years exhibit 2) 3,3
• from exhibit 6 the Big Sur Total present value
  for 3 growth rate is 26 m

6
Price Big Sur should offer

• 100 of Total present value 26 m
• 90 of Total present value 23,4 m

7
Advisors opinion

• Start negotiations with price of 23,4 m for 90
  of equity
• exit negotations if RMAG management insists for
  price higher than 31,5 m