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Draft a presentation and excel sheet PowerPoint presentation and an Excel file containing valuation and profitability models.

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Added on: 2022-11-14 05:44:58
Order Code: 475979
Question Task Id: 0
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Your team is still celebrating the success of the Hibbett deal when your boss is approached by one of your oldest corporate clients who needs your advice on a possible acquisition deal.

Specifically, your client is thinking about buying a specific company and your task is to provide advice on the the structuring of the deal and its possible profitability.

 As it is customary in this situation, the output of your effort will be a PowerPoint presentation and an Excel file containing your valuation and profitability models.

 V.F.Corporation (VFC) one of your clients operating in the lifestyle apparel and footwear industry is looking to acquireCaleres, Inc. (CAL), a company that engage retail and wholesale of footwear.

 V.F. Corporation has initiated talks with Caleres, and there is a reasonable expectation of being able to complete an acquisition for a price between $27.50 and $31.25 per share (representing approximately 10% to 25% purchase premium on the October 14 trading price of the stock).

 The output of your work will be a presentation (PowerPoint or similar) containing: 

  1. A brief presentation of the target
  2. A brief presentation of the
  3. The proposed structure of the deal (financing and offer structure).
  4. A profitability analysis including your assumption on deal 

Your deliverable will be a PDF file with your presentation and an Excel file with the profitability analysis.

1.  Company Presentation

The goal of this section is to give the reader a clear picture of the target company, its business model, growth opportunities and financial situation. After reading this section the client should understand the current financial situation of the company and its prospects

You should try to provide a complete picture of the company including: 

  • Historical Profitability and growth
  • Leverage and financial soundness
  • Future prospects 

To complete this section, you should find all the relevant information in FactSet. You can also find information on the website of the company. If you are interested in having a better grasp on the industry where the company operates you can check this industry report on IBIS World via the UTS library. The industry outlook section of the report can be particularly useful, especially to think about scenarios and synergies. 

2.  Industry Outlook

The goal of this section is to give the reader a clear picture of the US Footwear Wholesaling and retail industry (this is the industry of the target according the NAICS classification), its current state and its future prospects. After reading this section the client should understand what the main risks and growth drivers in this industry are and how these translate into the assumptions you have embedded into your profitability model. 

You can find information on the state and prospect of the industry in FactSet. You can also find thisindustry report on IBIS World via the UTS library. The industry outlook section of the report can be particularly useful, especially to think about scenarios and synergies. 

3.  Deal Structure

The talks between your client and the target have settled on a deal for the acquisition of the equity of the target where all the existing debt of the target will be ported into the new entity. 

You should consider two different deal structures for the deal:

  1. One where the amount of equity and debt used to finance the deal are chosen to maximize the profitability for the acquirer under your “baseline” scenario with synergies (see paragraph 5 below for a description of the scenarios).
  2. One where the deal is financed with equity 

As usual if the equity only structure is optimal for profitability, your two structures will be the same. 

3.1 Funding and Financing Costs

After consulting with your capital markets division, you estimate that the deal could be financed with a combination of the following sources of funds: 



Size Limit

Interest Rate

Financing Fee

Term Loan B


2.75x EBITDA

LIBOR + 1.00%


Subordinated Note





Revolving Credit Facility



LIBOR + 2.00%


 The maximum size for all forms of external financing is measured as a multiple of the LTM EBITDA of the combined entity. For sake of simplicity, you can assume that all sources of debt have maturity of 10 years (outside your modelling horizon). The term loan has 5% annual mandatory repayment.

 Please note that the acquirer has an existing unsecured term loan. For the purpose of this valuation, you can assume that LIBOR and ABR is the same rate.

 The Revolving credit facility is not to be used for financing the deal. It will be activated only in case of bankruptcy.

 The company should also close every year with at least $300m in cash. Loan covenants require at least 10% equity in the company.


4.  Profitability Analysis

The goal of this section is to provide the reader with an estimate of the profitability of the deal (Accretion in your year 1, the first full year after the pro-forma) under a number of possible scenarios.

4.1    Operating Scenarios

You will have to analyse the profitability of the deal under two operating scenarios.

  1. Baseline. This scenario will be based on your best assumptions on the evolution of the two firms standalone.
  1. Pessimistic. This scenario is designed to capture a pessimistic

This is not a “major stress” scenario, but simply a scenario where the economic environment for the next 2-3 years is unfavourable, in line with “tough times” (but not exceptionally so) for this industry.

4.2    Synergies

You will have to model three scenarios for your synergies

  1. Baseline. This scenario will be based on your best assumptions on the deal synergies assuming an ordinary evolution economic
  2. Pessimistic. This scenario is designed to capture your assumptions on the deal synergies if the evolution of the economic environment is unfavourable (the pessimistic environment previously described). To be clear this is not a pessimistic scenario for the synergies, but your assumption of synergies in the pessimistic operating scenario. If you think that the economic environment has no effect on your ability of extracting synergies, this scenario would be the same as the
  3. No This scenario simply assumes zero synergies.


5.  Structure of the presentation

There is no formal requirement on the length of your presentation but from the example posted you will see that this type of document usually has between 15 and 30 slides including appendices. Here is an example breakdown of the body of the presentation.




Presentation of the Target


Presentation of the Industry


Deal Structure


Profitability Analysis



 You will not be judged on the length of the presentation but on the quality of the content. Do not pad your deck with useless junk to make volume.

 All the important information should be included in the body of the presentation. The appendix should contain additional information that may be useful for the reader but not essential to understand your proposal.

The Deal Structure portion of the presentation should contain: the presentation of the optimized deal structure and the analysis of the leverage and liquidity of the resulting entity under the two possible deal structures (optimized and equity only) and the two operating scenarios. From reading this part the reader should understand how the credit risk of the company will evolve. For example, would the pessimistic scenario push the company close to default if we use the optimized financing structure?

 The Profitability Analysis should present and justify all your key assumptions (both operating and synergies) and present the profitability of the deal under different combinations of scenarios and deal structures.

6.  Data and Examples

Financial data can be found in FactSet. Instruction on how to access the data can be found in the after class videos.

 Firm and industry reports can also be downloaded IBIS World via the library.

 The best assignments from previous years will be provided as a reference. These are provided only as an example of our expectations. They should not be followed closely because the content of the assignment has changed! For example, they contain a long part on the valuation of the target (DCF and multiples) that is not part of the assignment this year. I will also upload a real pitchbook to give you a feeling for the style.

 The knowledge necessary to complete the assignment will be covered in the subject, with the theoretical aspects analysed in class and the technical components (including how to use the excel models and how to access information in FactSet) explored in the valuation exercises.

  • Uploaded By : Katthy Wills
  • Posted on : November 14th, 2022
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