Assuming each of the precedent transaction companies was able to achieve 50% of the expected...
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Finance
Assuming each of the precedent transaction companies was able to achieve 50% of the expected synergies in 2020 (and that these synergies were not reflected on the 2020FY income statement), re-calculate the Enterprise Value multiple for both Big Lumber and Lumberjack. (Show all work)
($millions) Big Lumber Co. Lumberjack Inc. Balance Sheet: Cash & Cash Equivalents $ 20.0 $ 25.0 Current Assets 85.0 110.0 PP&E 242.0 265.5 Current Liabilities 70.3 81.6 C Debt 100.0 130.0 Preferred equity 44.0 50.0 t Common equity 88.0 95.0 Income Statement: Net Revenue 225.0 250.0 Cost of Goods Sold* 135.0 150.00 Restructuring Charge 10.0 0.0 Asset Write-down 0.0 5.0 e Operating income 80.0 95.0 Interest expense 4.2 6.12 Other expense 3.0 2.5 Taxes (38%) 27.7 32.82 Net income 45.1 53.6 * Assume depreciation expense represents 10% of Cost of Goods Sold. + Note: The expected annual synergies for Big Lumber and Lumberjack are $4.0 million and $5.0 million, respectively
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