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Mergers & Acquisitions Modelling

Achieve Corporation act as either the buy or sell side advisors on corporate transitions. This experience in a dual role gives us a valuable insight into the metrics, thought process and modelling needed to successfully plan the financial aspects of a merger or acquisition.

Our modelling can be used as either a:

  • Pitch deck to seek funding for a project
  • Back up financials for sign off at Board level planning committee
  • Feasibility studies to highlight potential financial synergies on acquiring targets in either a horizontal or vertical sector

The Achieve Corporation M&A modelling includes:

  • Acquirer & Target Models – Map financials, 3-statement model, discounted cash flow model
  • Deal Assumptions – Inputs, synergies, financing, value added and goodwill
  • Accretion/Dilution – Pro forma per share metrics
  • Closing Balance Sheet – Acquirer + target, adjustments, goodwill and pro forma
  • Sensitivity Analysis – Intrinsic value per share, ROE, ROI, changes in assumptions
  • Pro Forma Model – Combination of synergies, 3-statement model, Discounted Cash Flow  

For a discussion in the strictest confidence about the benefits of our M&A model, please contact Mark Roberts Senior Partner at Mark@achieve-corproation.com

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Raising Capital

Businesses can use either debt or equity capital to raise money—where the cost of debt is usually lower than the cost of equity.

Debt holders usually charge businesses interest, while equity holders rely on stock appreciation or dividends for a return.

Preferred equity has a senior claim on a company’s assets compared to common equity, making the cost of capital lower for preferred equity.

The financial models from Achieve Corporation involves determining the mix of debt and equity that is most cost-effective for your business.

Our scope of works normally includes:

  • Investigating and advising on the different funding options – debt, equity, grants, supplier finance
  • Preparing and presenting a set of forecasts and a business plan
  • Helping clients assess the commercial, accounting, and cash flow implications of financing structures
  • Introductions to funders based upon our existing network of PE companies’ and corporate lenders
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Ratios and Statistics

Financial ratios are powerful tools to help summarise financial statements and the health of a company.

They enable the business to ensure it is running at the optimum efficiency by calculating working capital, pricing structures, profit margins and efficiency of assets used.

An analysis is normally done on the past performance of a business with future performance then be forecast. The gap analysis between the two sets of figures highlights potential efficiencies, to be made, resulting in cost reductions and increases to the bottom line.

The Achieve Corporation Ratios and Statistics analysis includes:

 Profitability

  • EBIT
  • EBITDA
  • Adjusted EBITDA 
  • ROA
  • ROCE
  • ROE
  • Gross Profit Ratio
  • Operating Profit Ratio
  • Pre-tax Profit Ratio
  • Net Profit Ratio

Liquidity

  • Current Ratio
  • Quick Ratio
  • Working Capital
  • Working Capital Ratio

Solvency/Leverage

  • Debt Equity (DE) Ratio
  • TOL/TNA
  • Capital Gearing Ratio
  • Degree of Operating Leverages (DOL)
  • Degree of Financing Leverages (DFL)
  • Debt Service Coverage Ratio (DSCR)
  • Future Capital Pricing Based on ROCE

Efficiency

  • Debtors Turnover Ratio
  • Debtors Days
  • Capital Turnover Ratio
  • Future Capitalisation based on Capital Turnover

Valuation

  • Earnings Per Share (EPS)
  • Price Earnings (PE) Ratio
  • Market Value based on Price Earnings Ratio
  • Future Earning Per Share 
  • Net Asset Value (NAV)
  • Book Value Per Share
  • Intrinsic Value Per Share
  • Free Cash Flow
  • Discounted Cash Flow on Forecast Period
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Leveraged Buyout (LBO) Modelling

A leveraged buyout (LBO) is a type of acquisition in the business world whereby the vast majority of the cost of buying a company is financed by borrowed funds. LBOs are often executed by private equity firms who attempt to raise as much funding as possible using various types of debt to get the transaction completed. Capital for an LBO can come from banks, mezzanine financing, and bond issues.

Leveraged Buyout Models are useful in:

  • Determining a fair valuation for a company (including an ability-to-pay analysis)
  • Determining the equity returns (through IRR calculations) that can be achieved if a company is taken private, grown, and ultimately sold or taken public
  • Determining the effect of recapitalizing the company through issuance of debt to replace equity
  • Determining the debt service limitations of a company from its cash flows

Using an LBO model constructed by Achieve Corporation will enable you to:

  • Calculate the actual price to be paid for a company
  • Model the company’s past and future cashflow to pay back the debt
  • Determine the earnings capacity of the business
  • Verify that the decision to acquire a business using Leverage buyout Principles is the correct one to take  

We can act for either the buy or sell side in preparation for Leverage Buyout Models.

For a discussion in the strictest confidence of the benefits of LBO modelling, please contact Olivia@achieve-corproation.com.

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HelloFresh inks $277M deal for US meal delivery startup

Germany’s HelloFresh has agreed to buy Illinois-based meal delivery business Factor75 for up to $277 million, as European food companies turn their attention to the US to fuel growth.

The deal comes just a few weeks after Nestlé completed its $1.5 billion acquisition of New York-based meal delivery startup Freshly. In June, Just Eat Takeaway.com fought off a rival bid from Uber to buy Grubhub in an all-stock transaction worth about $7.3 billion.

Factor75 will join HelloFresh’s existing US portfolio including EveryPlate and Green Chef, which it bought in 2018. The deal will give HelloFresh its first office in Chicago, as well as four production and fulfillment facilities.

Frankfurt-listed HelloFresh is currently the largest meal-kit provider in the US in terms of market share, reportedly surpassing Blue Apron in 2018. It logged 2.5 million active customers in the US during Q3 2020, a near 70% increase year-over-year. The pandemic has created a surge in demand for meal kits as shoppers seek alternatives to grocery stores. The meal kit market is expected to reach $14.8 billion by 2025, representing a 10.6% compound annual growth rate, according to PitchBook’s Q3 2020 foodtech report.

Founded in 2013, Factor75 specializes in healthy ready-to-eat meals. It secured $12.5 million in May in a round led by Marcy Venture Partners. Factor75 is expected to generate revenue of around $100 million in 2020.

 

Read More – www.pitchbooks.com

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Bertelsmann set to buy US publisher Simon & Schuster

Penguin Random House owner Bertelsmann has agreed to acquire New York-based publisher Simon & Schuster from ViacomCBS for over $2 billion, Reuters reported.

Following the deal, the German group will hold nearly a third of the US publishing market by revenue. Bertelsmann beat out Rupert Murdoch’s News Corp and French media group Vivendi in an auction for the company, which ViacomCBS put up for sale in March in order to refocus on its core assets.

Rival book publishers, including News Corp-owned HarperCollins, have raised antitrust concerns about the acquisition, according to the Financial Times. Critics have said that Bertelsmann could exert too much power in specific genres, particularly hardcover fiction. Simon & Schuster publishes some of the world’s bestselling authors, including Dan Brown and Stephen King.

Through Penguin Random House, Bertelsmann is already the largest global book publisher by revenue, reporting €3.6 billion (about $4.3 billion) in 2019. The group agreed last December to acquire the remaining shares of Penguin from UK-based peer Pearson for $675 million, giving Bertelsmann full ownership.

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UK revisits IPO rules to entice tech founders

The UK government said Thursday it will review the rules around initial public offerings as it looks to make post-Brexit Britain more appealing to tech founders seeking to take their companies public.

The review includes measures that would give founders more influence over their companies upon listing, including the allowance of dual-class share structures that give some shareholders—notably founders—more voting rights per share than others.

Free float rules are also under review. Currently, companies listing on the London Stock Exchange must make 25% of their shares public. A lower free float threshold would let entrepreneurs maintain more control after going public.

Not everyone is a fan of the changes suggested.

“Traditionally, many institutional investors are wary of dual-class structures in the UK because they value the principle of one share, one vote,” said Claire Keast-Butler, a London-based partner with law firm Cooley who herself has been advocating for the use of dual-class shares. “They think that it is potentially bad for corporate governance because they’re putting too much power in the hands of a founder, or founders, rather than the shareholders as a whole.”

Keast-Butler said there has been a lot of resistance in the investor community to changing the system. Many fear rule changes could make founders less accountable. A case study often pointed to by critics is WeWork. The co-working giant imploded as it was preparing to go public in 2019, largely due to founder Adam Neumann taking advantage of a multi-class voting structure to wield outsized influence and thus eliminating any checks and balances on the company’s governance.

 

Read more – www.pitchbook.com

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Nutraceuticals Company

Client – Nutraceuticals Company.

Instruction – Project manage business sale of Nutraceutical Company with new IP and product to Pharmaceutical Sector.

Role – Create financial business case for limited auction to key selected companies.

Result – Four offers received at 118% over book price.

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Online Travel Ticketing Company – Turnover £53 Million

Client – Online Travel Ticketing Company – Turnover £53 Million.

Instruction – Prepare ‘Pitch Deck’ for presentation to Target 250 FTSE Companies.

Role – Pitch Deck created with DCF Model. Pyramid ROI,ROE and Risk Management. Calculated micro financials for planned merger and or acquisition by Targets.

Result – Managed competitive bidding scenario resulting in multiple offers above 22% of share price.

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Project Deneb

Civil Engineering Companies Wanted For Acquisition Company C.

Revenue last year – £28 Million.

Number of acquisitions made last year – 3.

Number of acquisition to be made next year – 4 (Dependent on deal structure).

Budget for acquisitions – £5 Million per deal.

Normal deal structure – 75% of total consideration on day 1. Balance paid quarterly over two years.

Contact Simon Ashcroft – Partner at Simon@acheive-corporation.com or contact us by clicking here.