Brazos Partners The CoMark LBO Case Solution

Case ID: 202090
Solution ID: 8622

Words: 1465

Price: $19

Case Solution

The case shows the partners of a buyout are discussing the buyout of a building company. The original decision was to do a stock deal. During their discussion, they realized that an asset deal might also be an option available to them. They assess the benefits of an asset deal and the impact of it on the sellers.  The case discusses the deals’ thorough discussion and states the21st century conditions of the LBO industry

Excel Calculations

 Discounted Cash flow analysis

 Terminal Value Estimation

 WACC Estimation

 Cost of debt

 Cost of Equity

 WACC Calculations

 Return on Investment


Comparable Method 

 Enterprise Value of ModTech for 2000 using EBDITA Multiple

 Enterprise Value of ModTech for 2000 using Revenue Multiple


Tax Benefit

 PV @WACC (average 10%) 

 Total Value

 Total Value ( in $ M)

Questions Covered

1. What is the Intrinsic Firm Value of CoMark?

2. Is the price being offered “fair?”

3. Does CoMark have enough Equity Free Cash Flow to satisfy its debt obligations?

4. Which party is getting the best deal?

5. How important is the difference between a “stock deal” versus an “asset deal?”

6. Is a mezzanine loan at 20% better than the seller financing, for whom?

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