Venture Capital and Private Equity Questions And Answers

Venture Capital and private equity - Final assignment
Assignment Instruction

Assignment Question

Your PE House has been approached to purchase Bas shareholding in KIM_ You have been asked by the Investment Director to prepare a report on KIM for the Investment Committee, with a buy recommendation containing the following elements:
▪ Investment Hypothesis, (15%) Market review or the sector. CF Oro) Gash Flom (15%) Cash flow forecast for the next 4 years, to assess the level of free cash flow projected capex:

1) Which must be used to service existing?

2) Plus any additional debt that may be used in the purchase of BC's shareholding.

3) You are also required to assess any potential cash shortfall to finance the company's capital expenditure plan. • Enterprise Value: (15%) Provide a current Enterprise Value (EV) analysis,. with reasons for the means of valuation closer. You will then calculate the equity value, and hence value BC's holding_

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▪ Deal Structure: (15%) Consider the Ilse structure of your investment, in terms of the debt/equity split. It is important that any debt that you employ can be serviced by the free cash Thaw from the 4-year cash flow analysis.

• Exit and Return: (.15%) Estimate the EV at the point of exit. and hence the equity value of your investment. ext. in order to provide the IC with visibility of the money multiple and IRR investment.

• Exit Options: (15%) Provide the investment committee with a review of possible cryptic and consider which might be most advantageous for the PE House.

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