Page 49 - FINAL CFA II SLIDES JUNE 2019 DAY 6

EXAMPLE: Mia Yost, an investment banker, has been retained by the
Gracico Corporation to estimate the price that should be paid to acquire Albert READING 25: MERGERS AND ACQUISITIONS
Garage Systems, Inc. (AGSI). Yost decides to use CCA to value AGSI and
has gathered information on comparable firms and recent acquisitions shown MODULE 25.3: TARGET COMPANY VALUATION
in the following below. Calculate the appropriate valuation metrics and
using the mean of those metrics, estimate the price that Gracico should
pay for AGSI.
Step 3.1: Calculate mean for the relative value metrics.

Step 3.2: Apply the relative value metrics to AGSI.

Step 1: Identify the set of comparable firms –Done!

Step 2: Calculate various relative value measures.

All values
very similar,
so we can
easily taken
But this is not what you as Mia Yost, will advise Gracico
Corporation to bid/pay to take over AGSI, especially if average!
you wish to take over above 51%, Why?