Definitions
The characteristic associated with a company when a majority of its sales occur during one period of the year
What is seasonality?
Buck Auto's largest customer
What is Walmart?
The multiple that Sentry was trading at.
What is 11x EBITDA?
The common proxy for terminal growth rate and its limitations
The common multiples used in precedent transaction analysis
What is EV/EBITDA and EV/Revenue?
A company that acquires another company in the same industry to capture synergies.
What is a strategic buyer?
The advantage associated with the seasonality of Buck Auto's business model
What is revenue visibility?
The reason why Buck Auto's intermediary "shopped around" for a buyer
What is to find the best price?
What is sensitivity analysis?
The reason that NTM values are used in the Buck Auto case
What is revenue visibility?
Risk associated with the knowledge, skills, and important relationships at the hands of one or a few staff members.
What is key-man risk?
What is its own Barrie facility in Ontario?
The difference in offer price between verbal offers from Sentry
What is $10 million?
What is the Gordon Growth Method and the Exit Multiple method?
The colloquial name for the output range from input multiples.
What is a football field analysis?
The kind of valuation often associated with private equity-sponsored transactions and described in the case. Lots of debt, little equity.
What is a leveraged buyout (LBO)?
The risk associated with the company's cash flow
*hint: think about Buck Auto's location*
What is foreign exchange risk or currency risk?
Three critiques of Buck Auto from the intermediary.
What is (1) low growth/competitive U.S. market, (2) significant customer concentration, (3) management team lacked depth?
The value that heavily influences a DCF analysis. Assumptions and methodology matter as most of the present value is made up of this.
What is the terminal value?
What is high revenue visibility and a higher offer price?
You may consider the 2016F EBITDA in our precedent transaction analysis this, as we have removed unlikely or non-recurring environmental costs from the analysis
What is adjusted EBITDA?
The environmental concerns observed in Buck Auto's business are called this by the market
What is ESG risk/remediation expense?
This case unusual in that the private equity offers $40 million and Sentry offers $30 million, why?
What is strategic buyers typically are willing to may more as they will benefit from synergies?
These DCF results reveal a "go" or "no-go"
What are NPV and IRR?
How far back you can reasonably source transactions
What is typically 3-5 years or a time period with similar market conditions?