Assignment -
Completing assignment which requires to complete business valuation for acquisition.
Your Assignment - What should Chandler do? Before deciding, first complete the three model cases he asked for using the SAAM model provided. You will have to enter all the numbers in yellow cells that have not already had values entered, putting in for 8 years the sales growth rates, gross margins and operating margins for each of your three price assumptions (Tabs DCF-A, DCF-B and DCF-C). Use the information in the case to complete these blanks based on the results of the due diligence team. Once, all blanks are entered, the model will calculate the purchase price ratios and financial impact of the three cases Chandler is considering. First use this information to analyze the impact of completing or losing the deal, then determine what decision you would make in Chandler's position. Also use the model to complete the four additional sensitivity analysis cases he assigned to Tarbet, to give you added perspective on the best pricing decision. For these you will have to change the sales growth and operating margin assumptions found in the three DCF Projections for Cases A, B and C. Suggestion: To avoid confusion, print out the summary page of each model variation and write at the top of page one the growth and margin assumptions, giving a different designation to each case iteration. Then transfer the key results to the Summary Table attached below.
Your assignment is to write a memo to the Sunrise board of directors that assumes you are and have been the Sunrise CEO instead of Chandler. The memo, 3-4 pages in length (single spaced), should explain the results of the due diligence review, including what happened at Parker, what can be done about it, and what numbers have changed in your earnings model as a result. You should then explain the reasons for the course of action you are proposing and alert them to an upcoming telephonic board meeting to discuss, and hopefully approve, your proposal. Make sure your memo includes the new purchase price ratios for the recommended alternative, based on the due diligence results, comparing them to what the board already approved in June. Include in your memo the most important numbers from the appropriate model, e.g., NPV, IRR, EPS dilution or pick-up. Also include a table with highlights from the sensitivity analysis and incorporate into the memo your conclusions from that exercise. Do not include the entire Summary Table, which is too much information for a board letter, but just the information to support the points you are making in the letter.
Attachment:- Assignment Files.rar