Proposal for the Acquisition of Sample Industries, Inc.
Proposal for the Acquisition of
Sample Industries, Inc.
Prepared for:
Timothy Jones, CEO
ABC Actuarial, Inc.
Prepared by:
John Smith, CPA
ACME Valuation Services, LLP
500 North Michigan, Ave.
Chicago, IL 60600
The information contained herein is of a confidential nature and is intended for the
exclusive use of the persons or firm for whom it was prepared. Reproduction,
publication or dissemination of all or portions hereof may not be made without prior
approval from ACME Valuation Services, LLP.
This sample acquisition proposal was generated using Buy-Out Plan? and the Financial Report Builder?.
For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.
How This Report Was Generated
This report is a sample of the type of comprehensive acquisition proposal that you can quickly create with
MoneySoft¡¯s Buy-Out Plan? and Financial Report Builder? enhancement. Buy-Out Plan was used to
analyze the target company, determine purchase price and terms, and structure a workable financing plan.
The Financial Report Builder was then used to automatically create and format the acquisition proposal as a
Microsoft Word document!
If this were a ¡°live case,¡± descriptive text would be added about the company, its markets, management and
staffing, capabilities and operations, developing trends, and future prospects of the company. In addition, the
rationale for assumptions, potential synergies, changes to be made after the sale, capabilities of the buyer, and
a discussion of the strengths, weaknesses, opportunities and threats (risks) involved in the proposed
transaction could also be included in the presentation.
An Overview of the Scenario
In this sample case, the buyer is an investment group that has adopted a vertical build-and-hold strategy. The
target company is profitable, stable, fits well into the buyer¡¯s strategic portfolio and offers much needed
productive capacity. The Sellers are asking for $18,000,000 based upon an asset sale. The Buyer estimates
that the Enterprise Value of the company is approximately $16,245,656 and has offered $16,000,000. The
target¡¯s assets will be acquired by a newly formed entity that the buyer will control (¡°NewCo¡±).
This is a friendly transaction. Most of the management of the seller will be retained and have an opportunity
acquire an equity stake in NewCo. The acquisition will be funded with the buyer¡¯s stock, senior secured
debt, a convertible mezzanine strip, and some seller carryback. After the acquisition, the buyer intends to use
the target¡¯s available capacity to manufacture product currently produced by third-party vendors. In addition,
the buyer intends to upgrade equipment and install procedures that will improve collections and reduce
inventory levels. This Buy-Out Plan report pulls the deal together and provides a thorough bottom-line
analysis of the proposed deal.
The names and numbers used in this sample report are fictitious. Any similarity to the names or information
of actual companies is strictly coincidental.
A note about the colors used in this sample report:
As you review this sample report, you will notice that there are values inserted directly into narrative
paragraphs. All of these value insertions take on the text color of the surrounding text in the paragraph, i.e.,
black. You will also notice that some of the text is blue, dark red and magenta. The significance of each of
these colors is as follows:
?
Blue is used whenever the Report Builder creates a table that has a fixed width.
?
Tables with variable widths (dependent upon the number of years/periods selected) are indicated in
dark red.
?
Non-printable comments are indicated in magenta.
This sample acquisition proposal was generated using Buy-Out Plan? and the Financial Report Builder?.
For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.
¡ª Table of Contents ¡ª
?
*SPECIAL COMMENT*: To update the Table of Contents, click
anywhere in the following table and then press the [F9] function key.
EXECUTIVE SUMMARY
1
ASSUMPTIONS AND LIMITING CONDITIONS
4
EXTERNAL SOURCES OF INFORMATION
5
INTERNAL SOURCES OF INFORMATION
5
COMPANY BACKGROUND
Company Identification
Nature and History of the Company
Stock Classes and Ownership
Management Team
Product and Service Information
Market Data and Analysis/Competition
Governmental or Regulatory Environment
Key Customers and Suppliers
Marketing Strategy
Business Risks
Current Operations
Company Expectations
Other Observations
5
5
5
5
6
6
6
6
6
6
6
7
7
7
NATIONAL ECONOMIC AND INDUSTRY CONDITIONS
General Economic Conditions and Outlook
Industry Conditions and Outlook
8
8
8
HISTORICAL AND NORMALIZED FINANCIAL STATEMENTS
Summary Historical Income Statements
Income Statement Adjustments
Normalized Historical Income Statements
Summary Historical Balance Sheets
Balance Sheet Adjustments
Normalized Historical Balance Sheets
Summary Historical Statements of Cash Flows
Normalized Earnings and Net Cash Flow Summary
Normalized Interim Financial Statements
9
9
9
10
10
11
11
12
13
14
ANALYSIS OF HISTORIC FINANCIAL STATEMENTS
Business Common-Size Financial Statements
Business vs. Industry Common-Size Financial Statements
Business Financial Ratio Analysis
Business vs. Industry Financial Ratio Comparison
16
16
17
19
21
VALUATION OF SAMPLE INDUSTRIES, INC.
Overview of Valuation Approaches and Methods
Preferred Stock Valuation
22
23
24
This sample acquisition proposal was generated using Buy-Out Plan? and the Financial Report Builder?.
For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.
Net Asset Value
Discount & Capitalization Rate Estimates
Capitalization of Earnings
Discounted Future Earnings
Projection Summary
Summary Income Statement Projections
Summary Balance Sheet Projections
Summary Retained Earnings Projections
Summary Cash Flow Projections
Summary Sources & Uses of Funds Projections
Overview of Projection Assumptions
Revenue & Expense Assumptions
Fixed Asset Depreciation Assumptions
Disposals of Existing Fixed Assets
Fixed Asset Purchases
Existing Notes Receivable Assumptions
Amortization of Intangible Assets
Existing Notes Payable Assumptions
Fixed Asset Purchase Financing Assumptions
Dividends Assumptions
Discounted Future Earnings Value Calculations
Discounted Net Cash Flow Value Calculations
Comparative Company Method
Search for Comparatives
Price to Earnings Multiple
Price to Revenue Multiple
Price to Gross Cash Flow Multiple
Valuation Summary
24
25
26
27
27
28
28
29
29
29
29
30
30
31
31
31
31
31
32
32
33
34
35
35
36
36
36
37
PROPOSED PURCHASE PRICE & TRANSACTION STRUCTURE
Price Premiums/Discounts
Key Pricing Multiples
Transaction Costs
Allocation of Purchase Price & Total Purchase Cost
Funding Requirements & Structure
38
38
39
40
40
42
PROPOSED ACQUISITION FUNDING
Proposed Term-Debt Funding
Proposed Equity Funding
43
43
44
POST-ACQUISITION PROJECTIONS
Post-Acquisition Projection Summary
Summary Post-Acquisition Income Statement Projections
Summary Post-Acquisition Balance Sheet Projections
Summary Post-Acquisition Retained Earnings Projections
Summary Post-Acquisition Cash Flow Projections
Summary Post-Acquisition Sources & Uses of Funds Projections
Overview of Post-Acquisition Projection Assumptions
Revenue & Expense Assumptions
Fixed Asset Depreciation Assumptions
Fixed Asset Purchases
45
46
46
47
47
48
48
49
49
50
50
This sample acquisition proposal was generated using Buy-Out Plan? and the Financial Report Builder?.
For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.
Amortization of Intangible Assets
Existing Notes Payable Assumptions
New Funding Notes Payable Assumptions
Fixed Asset Purchase Financing Assumptions
Equity Funding
Dividends Assumptions
50
50
51
51
51
52
REVIEW OF POST-ACQUISITION FINANCIAL PERFORMANCE
Loan Compliance
Post-Acquisition Business Ratios
Post-Acquisition Common-Size Statements
53
53
53
55
RETURN ON INVESTMENT
Return on Total Invested Capital
Return on Total Invested Equity Capital
Projected Valuation
Internal Rate of Return
Per Share Analysis
56
56
57
58
58
59
This sample acquisition proposal was generated using Buy-Out Plan? and the Financial Report Builder?.
For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.
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