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Assist with Project Management

$250-750 USD

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Posted about 8 years ago

$250-750 USD

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Merger Analysis Smitty’s Home Repair Company, a regional hardware chain that specializes in do-it-yourself materials and equipment rentals, is cash rich because of several consecutive good years. One of the alternative uses for the excess funds is an acquisition. Linda Wade, Smitty’s treasurer and your boss, has been asked to place a value on a potential target, Hill’s Hardware, a small chain that operates in an adjacent state, and she has enlisted your help. Table 1 indicates Wade’s estimates of Hill’s earnings potential if it comes under Smitty’s management (in millions of dollars). The interest expense listed here includes the interest (1) on Hill’s existing debt,(2) on new debt that Smitty’s would issue to help finance the acquisition, and (3) on new debt expected to be issued over time to help finance expansion within the new “H division,” the code name given to the target firm. The retentions represent earnings that will be reinvested within the H division to help finance its growth. Hill’s Hardware currently uses 40% debt financing, and it pays federal-plus-state taxes at a 30% rate. Security analysts estimate Hill’s beta to be 1.2. If the acquisition were to take place, Smitty’s would increase Hill’s debt ratio to 50%, which would increase Hill’s beta to 1.3. Further, because Smitty’s is highly profitable, taxes on the consolidated firm would be 40%. Wade realizes that Hill’s Hardware also generates depreciation cash flows, but she believes that these funds would have to be reinvested within the division to replace worn-out equipment. Wade estimates the risk-free rate to be 9% and the market risk premium to be 4%. She also estimates that cash flows after 2018 will grow at a constant rate of 6%. Smitty’s management is new to the merger game, so Wade has been asked to answer some basic questions about mergers as well as to perform the merger analysis. To structure the task, Wade has developed the following questions, which you must answer and then defend to Smitty’s board. A. Several reasons have been proposed to justify mergers. Among the more prominent are (1) tax considerations, (2) risk reduction, (3) control, (4) purchase of assets at below-replacement cost, and (5) synergy. In general, which of the reasons are economically justifiable? Which are not? Which fit the situation at hand? Explain. B. Briefly describe the differences between a hostile merger and a friendly merger. C. Use the data developed in Table 1 to construct the H division’s cash flow statements for 2015 through 2018. Why is interest expense deducted in merger cash flow statements, whereas it is not normally deducted in a capital budgeting cash flow analysis? Why are earnings retentions deducted in the cash flow statement? D. Conceptually, what is the appropriate discount rate to apply to the cash flows developed in part c? What is your actual estimate of this discount rate? E. What is the estimated continuing value of the acquisition; that is, what is the estimated value of the H division’s cash flows beyond 2018? What is Hill’s value to Smitty’s? Suppose another firm were evaluating Hill’s as an acquisition candidate. Would it obtain the same value? Explain. F. Assume that Hill’s has 10 million shares outstanding. These shares are traded relatively infrequently, but the last trade, made several weeks ago, was at a price of $9 per share. Should Smitty’s make an offer for Hill’s? If so, how much should it offer per share? G. What merger-related activities are undertaken by investment bankers? TABLE 1 Estimates of Hill’s Hardware Data for Merger Analysis 2015 2016 2017 2018 Net sales $60.00 $90.00 $112.50 $127.50 Cost of goods sold (60%) 36 54 67.5 76.5 Selling/administrative expense 4.5 6 7.5 9 Interest expense 3 4.5 4.5 6 Necessary retained earnings 0 7.5 6 4.5
Project ID: 9827669

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Active 8 yrs ago

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11 freelancers are bidding on average $404 USD for this job
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Hello. My name is Edgar Diaz. I am Venezuelan, Engineer in Urban Planning Graduated in 1995. In 1998 I did a specialization in financial management (MBA) and in 1999 I made a specialization in project management engineering . I have extensive experience in project development: from its financial aspect , marketing and organizational .
$300 USD in 5 days
4.6 (21 reviews)
4.6
4.6
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Hi I would like to work for you. I will provide high quality well researched work with my senior level business experience. You may look at my outstanding reviews. I have had extensive exposure in cross-border M&A over a decade and handled large number of deals of various sizes. I am a qualified finance professional with national merit and 25+ years of experience in Business, Strategy and Finance in US / EU MNCs. Presently I am into my own consulting services. With this background, I will be able to deliver better service for you. Look forward to hear from you. Best Regards / Sanjib
$400 USD in 10 days
4.8 (8 reviews)
4.2
4.2
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I am a professional full time academic research writer fully proficient in HARVARD, APA, MLA, Chicago and Oxford writing styles. I am competent in writing dissertations, thesis, reports, case studies, personal development plans, personal statements, marketing plans, comparative studies (companies/countries), review of literature and systemic literature review. I am able to carry out research utilizing mixed method, qualitative or quantitative research. My services range from undergraduate to Ph.D. academic level and I have written papers on management (organizational/business management including but not limited to Organizational/Business strategy, Strategic analysis etc.), HRM (Strategic HRM, IHRM etc.), Operations management, Marketing (plans, positioning etc.), Chemistry, Nursing, Psychology, Political Science, History, Geography, World Affairs and Religion. My work is tailor-made to suit my client's needs and is written from an analytical and critical perspective utilizing up to date peer-reviewed sources of academic literature and books.
$535 USD in 10 days
4.5 (10 reviews)
4.2
4.2
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Hi, I have more than 9 years of experience in valuations, mergers and acquisition analysis and due diligence. I can answer the questions for you.
$500 USD in 10 days
4.4 (1 review)
2.7
2.7
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I have a Bachelor’s degree in Computer Science with 5 years experience in Academic, Articles, Reports & Technical Writing. I have experience in handling Thesis, Dissertations, Coursework, Session Long Papers, Manuscripts, Term papers, Business Plans & Presentations among others. I am proficient in Cloud Computing, Software Engineering, I.T Security & Networking, Ms Project, Office Applications, and Latex. As pertains to this project, I have read and understood all the instructions. I will deliver a quality and 100% original paper. I will deliver the paper within the given deadline and will engage in constant communication to avoid any inconveniencies. Regards, Isaac
$250 USD in 10 days
3.8 (3 reviews)
2.4
2.4
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I am an MBA in Finance from IIM Calcutta. I have also CFA level 2 certification.
$375 USD in 5 days
5.0 (1 review)
1.2
1.2
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Dear friend Greeting. I am an expert of Project management with more than 7 years of experience in MS Project. I would be glad to help you in this project. Waiting for your positive reply. Best regards Nawaz Akhtar Cell # +92 333 4109838
$305 USD in 5 days
0.0 (0 reviews)
0.0
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Hi, Working as an engineer was excellent experience but now working as a lancer would rise my living
$388 USD in 10 days
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Hello. I am experienced researcher and data mining specialist with 10 years experience in research field. I am expert in working with big data. My professional and personal skills make me a strong contender for your job. See my profile and portfolio. Thank you in advance.
$555 USD in 10 days
0.0 (0 reviews)
0.0
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*have done M&A challenges *have done extensive projects in valuation and financial analysis *currently working as financial analyst
$277 USD in 10 days
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