| Case 2: Multiples valuation and capitalization table |
| | Terra X is a private company involved in environmental waste disposal owned by 2 shareholders A and B. |
| | Terra X is looking to raise its share capital by 10 million USD in order to finance a new plant. |
| | Due to personal reasons Shareholder A needs to sell part of his shares for an amount equal to USD 1 million. |
| | Investor C proposes to (i) acquire the shares sold by shareholder A and (ii) fully subscribe the reserved capital increase. |
| | Based on the information below: |
| | 1) What would be the pre money equity value of Terra X based on the comparable analysis using the P/E multiple, and what are the implied EV/Revenue, EV/EBITDA and EV/EBIT multiple |
| | 2) What would be the pre money equity value of Terra X based on the comparable analysis using the EV/EBITDA multiple, and what are the implied EV/Revenue, EV/EBIT multiple and P/E |
| | 3) What is the post money equity value of Terra X after the transaction assuming you use the valuation in question 1) |
| | 4) What is the percentage owned by Shareholder A in Terra X post transaction assuming you use the valuation in question 1) |
| | Ownership structure |
| | Shareholder A | 55% |
| | Shareholder B | 45% |
| | number of shares | 1,200,000 |
| | Terra X Summary Income Statement |
| | (USD millions) |
| | Revenues | 11 |
| | EBITDA | 6.2 |
| | EBIT | 5.6 |
| | Net Income | 3.8 |
| | Terra X Summary Balance Sheet |
| | (USD millions) |
| | Fixed assets | 30.00 |
| | Current assets |
| | Cash | 4.00 |
| | Receivables | 80.00 |
| | Inventory | 40.00 |
| | Other current assets | 5.00 |
| | Total current assets | 129.00 |
| | Total Assets | 159.00 |
| | Long term debt | 7.28 |
| | Current liabilities |
| | Current portion of long term debt | 2.20 |
| | Payables | 22.00 |
| | Other operating current liabilities | 10.00 |
| | Total current liabilities | 34.20 |
| | Total Liabilities | 41.48 |
| | Shareholders equity | 117.52 |
| | Financial data of comparable companies (assume all mentioned companies are comparable) | Share price | EBITDA/Share | EPS | DPS | Net debt/Share | P/E Ratio |
| | Company |
| | Air & Water | $15.00 | $5.50 | $1.60 | $0.00 | $2.00 | 9.4 |
| | Allwaste | $14.00 | $5.90 | $1.40 | $0.00 | $1.00 | 10.0 |
| | Browning Ferris | $46.00 | $11.50 | $1.45 | $0.68 | $5.40 | 31.7 |
| | Chemical Waste | $17.00 | $3.75 | $2.00 | $0.15 | $6.00 | 8.5 |
| | Groundwater | $72.00 | $14.45 | $9.00 | $0.00 | $8.00 | 8.0 |
| | Intn'l Tech. | $14.70 | $3.35 | $1.60 | $0.00 | $1.00 | 9.2 |
| | Ionics Inc. | $123.00 | $31.00 | $18.00 | $0.00 | $22.30 | 6.8 |
| | Laidlaw Inc. | $46.00 | $5.85 | $9.00 | $0.12 | $3.00 | 5.1 |
| | OHM Corp. | $29.00 | $5.65 | $5.00 | $0.00 | $2.50 | 5.8 |
| | Rollins | $16.00 | $3.65 | $1.00 | $0.00 | $3.00 | 16.0 |
| | Safety-Kleen | $29.00 | $9.25 | $2.00 | $0.36 | $3.00 | 14.5 |
| | Average P/E Ratio | | | | | | 11.4 |
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