Management - PE House - KTM - Report Assignment Help

Internal Code : 3GDH

Management  Report Assignment Help

TASK Your PE House has been approached to purchase BC’s shareholding in KTM. You have been asked by the Investment Director to prepare a report on KTM for your Investment Committee, with a buy recommendation containing the following elements:

• Investment Hypothesis. 
• Market review of the sector.
• Cash Flow:  Cash flow forecast for the next 4 years, to assess the level of free cash flow after projected capex:

1) Which must be used to service existing, 2) Plus any additional debt which may be used in the purchase of BC’s shareholding. 3) You are also required to assess any potential cash shortfall to finance the company’s capital expenditure plan.

• Enterprise Value: 

Provide a current Enterprise Value (EV) analysis, with reasons for the means of valuation chosen. You will then calculate the equity value, and hence value BC’s holding.

• Deal Structure: 

Consider the structure of your investment, in terms of the debt/equity split. It is important that any debt which you employ can be serviced by the free cash flow from the 4 year cash flow analysis.

• Exit and Return: 

Estimate the EV at the point of exit, and hence the equity value of your investment at exit, in order to provide the IC with visibility of the money multiple and IRR on the investment.

• Exit Options: 

Provide the investment committee with a review of possible exit options, and consider which might be most advantageous for the PE House.

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