Corporate

Valuation
Preparation Questions for Cases

Amtelecom
• What does it mean when a company “trades at a discount”? Is Amtelecom Group
Inc. really trading at a discount? 

• Do you agree with AGI’s decision to break up the company? To sell the
communications business rather than the courier business? 

• Size up the communications industry and identify key success factors. Size up the
strengths and weaknesses of Amtelecom Communications. 

• Assess the value of Amtelecom Communications using all available valuation
methods. Which valuation method is most appropriate for each sales alternative?
What are the expected net proceeds for each alternative? 

• As Stanley Stewart, what sales proposal would you recommend? How would you
pitch it to the board? How would you market it to potential investors/acquirers? 


Interco
• Assess Interco’s financial performance. Why is the company a target of a hostile
takeover attempt? 

• As a member of Interco’s board are you persuaded by the premiums paid analysis
(Exhibit 10) and the comparable transactions analysis (Exhibit 11)? Why? 

• Wasserstein, Perella & Co. established a valuation range of $68-$80 per common
share for Interco. Show that this valuation range can follow from the assumptions
described in the discounted cash flow analysis section of Exhibit 12. As a member of
Interco’s board, which assumptions would you have questioned? Why? 

• How would you advise the Interco board on the $70 per share offer? 

• How would you assess the actions of Interco’s board up to August 8, 1988?
Wasserstein, Perella & Co.’s? The Rales brothers’? Drexel Burnham’s? 


Matrix Capital Management
• What is Matrix Capital’s investment philosophy?
• What is the role of analyst estimates in investment strategies and market efficiency?
• What is your estimate of the value of Rovi?

Lupin’s Foray into Japan

• Estimate the projected income statement and free cash flows of Kyowa under the
two different growth scenarios identified for the Japanese generics market.
• Calculate the rate relevant for discounting the cash flows associated with Kyowa.
• Estimate the stand-alone valuation of Kyowa as of April 2006.
• Estimate the potential value addition through cost savings which could be generated
by Lupin from the acquisition of Kyowa.
• How does the total value, including the cost synergies, compare with the valuation
obtained from approaches for Kyowa?
• Identify the key risk factors faced by Lupin in the acquisition of Kyowa?
• Overall, how attractive is Kyowa as an acquisition target for Lupin.

Magna International A & B
• In general, what advantages and disadvantages do you attribute to a dual-class
ownership structure? When and for what types of firms is such a structure most
appropriate? Least appropriate?
• From the perspective of a Magna Class A shareholder, what are the primary costs
and benefits of Magna’s dual-class ownership structure in 2010? 

• How much value do you believe would be created if Magna successfully unwinds its
dual- class structure? How would you propose to divide this value between Magna’s
Class A and B shareholders? 

• Specifically, what initial proposal should the Magna board make to Mr. Stronach? As
a Class A shareholder, what do you believe is the maximum consideration that
should be offered per Class B share? What is the minimum value you expect Mr.
Stronach to consider? 


IndusInd Bank
• As Painuly, what is your assessment of the investment target?
• Discuss the mechanics of the residual income valuation model and its applicability.
• As on March 31, 2013, assess the worth of IndusInd stock using the residual income
valuation model. Clearly state all the assumptions and calculations, including an
estimate of the long-term growth rate to be used to estimate the IndusInd terminal
value.
• Based on your analysis, as Painuly, would you consider IndusInd to be a potential
investment target for the fund’s equity portfolio?

Medibank Private Limited
• What is an IPO, and why does it attract so much attention? Is it appropriate for
Medibank to pursue this form of capital raising?
• What discount rate is appropriate for a discounted cash flow valuation of Medibank?
• How did you approach the calculation of terminal value? To what extent do the
terminal value assumptions affect Medibank’s estimated price per share?
• At what price do you value Medibank’s stock? If your estimate diverges from the
indicative range prescribed by the Australian government, what assumptions might
have contributed to this result?

Kohlar Company (A)
• What is the valuation (Enterprise Value) of Kohler Co using a discounted cash flow
approach? What is the enterprise value using a multiples (market value comparable
company) approach? What is the calue of a share held by a minority shareholder in
Kohler Co implied by your valuation?
• What assumptions can you use to arrive approximately at the share price of $55,000
that was estimated by Kohler co? Show how the assumptions impact your
assumption?





Flipkart
• How enabling or disabling is the external environment for Flipkart and other e-tailers
• Discuss the key features of Flipkart’s business model. What has been its core
business strategy?
• Evaluate how these features may have contributed to the value of the firm.
• Compute the implicit valuation multiples used by the VC firms in their 2013 funding.
Do these seem reasonable? Assuming a five-year exit horizon, what rate of return
would you think the VC firms expect from their investments?
• Based on the case information, what might be a reasonable rate of return on
investment from Flipkart? Do you think the return expected by the VC funds would
be (or should be) different from that demanded by an Indian retail investor?
• Apply a free cash flow model to Flipkart to arrive at a valuation. Can the standard
free cash flow to firm (FCFF) or free cash flow to equity (FCFE) model be applied to
Flipkart? Why not? In your opinion, is the approximate valuation of US$1.5 billion by
the VC investors reasonable?

IBET
• Fill out the Portfolio Summary Sheet in case Exhibit 3 valuing the individual
properties. Please show your valuation analysis and make a recommendation to hold
or sell each property along with your rationale. 

• If you were Caris, what recommendations would you make to the IBET Pension Fund
Board of Trustees regarding the real estate portfolio and its ongoing strategy?