one of the largest cable operators in the U.S., prepared to acquire the AirThread. Connections (ATC), a large regional cellular provider. Although this acquisition. By early , Zimmerman was considering the possibility of acquiring AirThread Connections, one of the largest wireless companies in the United States. This case can be used as a capstone valuation exercise for first-year MBA students in an introductory finance course. A senior associate in the business.
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We assume the equity as the average equity of the industry, which is 0. In terms of the long- term growth rate, Jennifer understood that it could not exceed that of the macro economy as a whole. Remember that different valuation models are not mutually exclusive, you can use different model for different forecasting periods. In addition, the company also believed that its experience as an acquirer had allowed it to develop unique operational know-how in the area of merger connectikns.
The acquisition would give American Cable access to wireless technology and the wireless spectrum and enable the company to offer competitive service bundles including wireless, currently a hole in the company’s service offering.
It offered services in more than markets across five geographic regions. Your Answer is very helpful for Us Thank you a lot! Pedagogical contribution We are very pleased to receive this airtnread as it means that we are being acknowledged as having made a pedagogical contribution in the area of financial case method. Show the cash flow forecasts, discount rate, and your valuation model.
Valuation of AirThread Connections Essay Example for Free
Second, without thorough due diligence, it would be impossible to project the free cash flows for those minority interest equity investments. Exhibit 2 According to the casebook, the reinvestment rate is defined as capital expenditures plus investments in working capital minus depreciation divided by net operating profit after taxes, and the ROC return on capital is defined airthraed net operating profit after taxes divided by the book value of equity plus debt.
Second, the acquisition could help both companies expand into the business market. Hi, I am Sara from Studymoose Hi there, would you like to get such a paper? As a airthreas, American Cable became an aggressive acquirer. In addition, the handwriting was on the wall in terms of service offering convergence.
Valuation of AirThread Connections
Click here to sign up. The cash flows of these five years combine the stand-alone cash flows and airtjread synergy cash flows. The potential synergies come from system operating cost saving as well as the increase in revenue and gross profit.
This presented two problems. In fact, some had argued that the company needed to find a suitor before its market position became untenable. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental.
We show that the high excess returns to hedge funds and put-writing are consistent with an equilibrium in which a small subset of investors specialize in bearing downside market risks.
Finance questions Finance questions Mercury Athletic. Hold-to-maturity accounting of portfolio net asset value eliminates the majority of measured risk. Click to learn more https: Sorry, but copying text is forbidden on this website. Download the case Educators can login to view a free educator preview copy of this case.
Jurek and Erik Stafford.
Table 2 Return on Net Operating Assets 3. Furthermore, expanding into the business segment would help each firm increase its network utilization and, as a result, increase its Do cost efficiency. connectioms
Valuation of AirThread Connections Essay
This discount is primarily related to the illiquidity of private investments, but also considers certain types of agency costs as well as the financial health and size of the firm. A senior associate in the business development group at American Cable Communications, one of the largest cable companies in the Airthrea. Moreover, she also knew the cost savings would be gradual. There are occasional references to actual companies in the narration. Zhang connectiona well aware that the terminal value was likely to be the single largest component of the valuation.
Valuation of AirThread op Given the potential importance and complexity of a possible AirThread acquisition, Zimmerman decided to tap Jennifer Zhang, an up-and-coming senior associate from the University of Chicago, to conduct the initial valuation of AirThread.
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