HC DEAL ROOM · Value → decide → reflect
Make the acquisition call.
You’re on Aster Group’s acquisition team. Examine a fictional target, set a price and defend your decision.
All companies, financials and valuation multiples are fictional teaching assumptions. Figures are £ millions. The model is simplified and is not investment advice.
Your investment committee memo
What would you offer?
Synergies are five equal annual after-tax cash flows, received at each year-end. They stay fixed when target EBITDA changes. Standalone EV uses an assumed multiple; only synergies are discounted.
How this valuation model works
Standalone EV range = forecast EBITDA × assumed low / high multiples. Midpoint EV = midpoint of that range. Synergy present value = annual after-tax synergy cash × [1 − (1 + discount rate)⁻⁵] / discount rate.
Model ceiling EV = midpoint standalone EV + synergy present value − one-time integration cost. Equity purchase price = offered EV − target net debt. Funding need = equity purchase price + integration cost. The teaching budget is cash available for these payments; it assumes existing target debt remains outstanding. It omits refinancing, fees, working-capital adjustments, tax on the transaction and additional capital spending.
Headroom = model ceiling EV − offered EV. Test the downside, then investigate the risks. A model ceiling is not a recommended real-world purchase price.
Check your deal reasoning · earn XP
Five questions per case use the original assumptions. Account XP is checked by HC’s existing server scorer; acquisition choices themselves do not mint XP. Complete a case for up to 125 XP, with only improvements rewarded on replay.
Checking your HC session…
Put your target in context.
Explore economic growth, inflation and market size before you think about a company’s customers and costs.
Explore the world economy →