EstimatethevalueofPinkerton?stoWathen.Useadiscountedcashflowapproach(not multiples). The
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- EstimatethevalueofPinkerton’stoWathen.Useadiscountedcashflowapproach(not multiples). The case presents forecasts for the “expected” scenario as well as for a “pessimistic” scenario. Use the “expected” scenario to forecast expected cash flows. Assume that the cost of unlevered equity is 15%.
- Suppose Wathen proceeds with the acquisition of Pinkerton’s. Which financing alternative do you recommend?
Explain why and provide the necessary calculations to back up your recommendation.
Note: if your valuation for Pinkerton’s is below $100 million, assume American Brands will lower the price. In other words, irrespective of your answer to question #1, address this question too.
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