Financing an Expansion
After 12 years, your business is wildly successful, with multiple locations throughout the region. You are now ready to think really big. You want to purchase a huge competitor. (Note: You determine whether the competitor is a privately or publicly held company.) To expand, you will need additional capital from the debt or equity market, or both.
Instructions
Write a 57 page paper in which you:
Use one of the valuation techniques identified in Chapters 11 and 12 to calculate the value of the competitor you wish to purchase. Note: You will have to make assumptions; however, your assumptions need to be rationally supported.
Analyze the various financial tools available to you to determine which tools will be most helpful in assessing whether your company can afford to purchase the competitor. Support your response.
Imagine you can indeed afford to purchase the competitor; however, you will need an additional $100 million.
Examine the options available to you to finance the competitor through the debt market, recommending the best alternative as a result of your analysis. Provide support for your recommendation.
Examine the options available to you to finance the competitor through the equity market, recommending the best alternative as a result of your analysis. Provide support for your recommendation.
Conduct a cross-comparison of your debt and equity examinations to determine where to ideally obtain the additional $100 million funding needed to make the purchase and the approach that you would take to securing the funds. Provide support for your recommendation.
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