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Question 1

SEWs share price closed at $60 on the day before the announcement. Use the information below to provide information on LGIs value.

Description	Values
Cash offer per share	$30
Exchange ratio	0.5
Fully diluted shares outstanding	140 in millions
Total debts	$2,600
Preferred stock	$60
Noncontrolling interest	$20
Cash and cash equivalents	$100
LTM EBIT	$980
Depreciation	$75
Amortization	$37
Synergies	$48
COGS	$1,450
LTM Sales	$5,680

(LTM- Last Twelve Months)

I. Calculate LGIs implied equity value.

ii. Calculate LGIs implied enterprises value.

iii. Calculate LTM transaction multiple EV/EBIT.

iv. Calculate LTM transaction multiple EV/EBIT plus synergies.

v. Calculate LTM transaction multiple EV/Sales.

vi. If the universe for the transaction comps acquisitions for EV/Sales is of 2.8x and a high of 3.8x. What is your recommendation to SEW Limited?

b. MT Limited (MTL) needed additional capital for expansion. MTL approached Trust Investment Bank for assistance. As the advisor assigned to MTL, given the limited number of companies within the sector, only the Discounted Cash Flow methodology could be used. The terminal year EBITDA (2020E) for MTL is $ 956.43, and the exit multiple is 6.8x. The weighted average cost of capital for MTL is 8.8%. The unleveled cash flows for 2016 to 2020 are presented in the table below. Use the mid-year convention in determining the value of MTL. (8 Marks)

Projection Period
		2016	2017	2018	2019	2020
Unlevered cash flow		$458.36	$411.58	$425.67	$395.34	$428.17

Question 2

a) Clear Cut Investment Bank employed Charles as a junior trader. Given your expertise in trading, you were assigned to train Charles. Explain to Charles the primary duty of traders and client - related traders. (4 Marks)

b) Charles indicated his interest in client-related trading and needed to understand the actions he could take to retain clients. Explain to Charles why clients leave investment banks and their actions to keep them. (4 Marks)

c) Charles needed to know the two focus areas of traders. Identify the areas and explain what each area entails. (4 Marks)

d) Audrey, the new employee at Clear Cut Investment Bank, was employed in the proprietary trading section of the bank. Compare and contrast the functions of Audrey and those of Charles. (4 Marks).

e) What is the potential conflict of interest between Audrey and Charles? How can this be mitigated? (4 Marks)

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