You are seeking to value Freshwater Squid Fisheries (“FSF”), a private company w

Question

You are seeking to value Freshwater Squid Fisheries (“FSF”), a private company with sales of $200M, EBITDA of $25M and EBIT of $20M. There are three public comparable companies but two are quite large and not a close fit, while one is smaller and less profitable. Luckily, you are able to identify three transactions in recent years in a similar size range.

-Assume Shrimp Cocktail Seafood Distributing is the best comparison. Assuming the EV/Sales ratio of 0.6X revenue is appropriate, what is the inferred enterprise value for FSF?

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2)

3)

4)

-What if we use EV/EBITDA?

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2)

3)

4)

-Assume FSF has an enterprise value of $150 million, debt of $50 million and 10 million shares. What is the value of equity per share?

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2)

3)

4)

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$150 million

2)

$120 million

3)

$300 million

4)

$175 million INCOME STATEMENT CAPI IALILAI IUN EVI EVI SALES EBITDA Ebil EQUITY DEBI CASH PRICE SALES EBITDA IRANSACIIONS Close Date 1UU 30 15 1,100 Happy Uctopus Fishing Company Shrimp Cocktail Seatood Distributing Dead Carp Cannery (Bankrupt) b00 300 200 1UU 25 1,U50 1/5 45 90 50 1/23/1/ 6/25/14 2.1X 10.5x U.6x 0.2x 5.8X 3.Ux 25 50 AVEKAGt LOW 1.UX 0.2x 6.4X 3.Ux PUBLIC COMPANY COMPS icker SALES EBIIDA ?v Charlie luna Hishernes Nippon Whaling # Pacitic Urganic Searood 8,UUU 3,0U0 125 1,6U0 1bU 1,450 100 12,U00 3,bU0 1UU bU 12,6U0 3,1UU 8U 1,100 IUNA NWALY 1.6X 1.UX 20.1x U.6x 7.9x 6U0 20 8.UX ares Outstanding # Hgures ?n Japanese Yen (JPY) In millions are Price AVERAGE LOW 1.1x 12.2x U.6x

Explanation / Answer

Sales = 200
EV/ Sales ratio =0.6
EV = 0.6 * sales = 0.6 * 200 = 120

EBIDTA = 25
EV/ EBIDTA RATIO = 5.8
EV = EBIDTA * Ratio = 5.8 * 25 = 145 million


Equity / share = (Total Value - Total debt)/ no of shares = (150 - 50)/10 = $10 /share

Best of Luck. God Bless

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