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
Discounted Cash flow analysis
Terminal Value Estimation
Cost of debt
Cost of Equity
Return on Investment
Enterprise Value of ModTech for 2000 using EBDITA Multiple
Enterprise Value of ModTech for 2000 using Revenue Multiple
PV @WACC (average 10%)
Total Value ( in $ M)
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?