Buyout Proposal Netflix

Buyout Proposal

Table of Content:

Introduction 3

Financial Statements 3

Market Position 4

Working Capital 5

Strength Asset Base 5

Viable Exit Strategy 6

Potential for expense reduction 7

Conclusion 8

References 8

Appendices 11

Introduction

The main goal of private equity funds is to increase the market value of their pooled capital, this is mainly reached by acquiring companies and exiting at a profitable stage. One way to do this is by a leveraged buyout (LBO). The acquirer of the target company first makes a down payment and borrows the rest of the amount to settle the deal. (UBS Alternative Investments, 2010). This paper recommends the buyout of Netflix. The reason for choosing Netflix is that it is a worldwide expanding company with a growing base of supporters. The company is mainly developing its subscriber’s base outside of the U.S. in countries such as Japan and Italy (Rosoff, 2015). However, this international expansion paired with the vision of providing a wider range of content requires large capital with increasing expenses. As a result the purpose of this paper is to investigate whether the buyout of Netflix is profitable. The paper first starts with describing the financial statements of Netflix, followed by analysis of its market position and finally an investigation of the potential buyout strategy.

Financial Statements

In this section, the paper inspects the financial statements of Netflix and compares the data from January 2013 to June 2015. The balance sheet reveals an increase of its total assets and liabilities from approximately $5.4 billion on December 31, 2013 to nearly $9.7 billion on June 30, 2015 (Netflix, 2015). The concentration of investments in the content library, along with the increase in liquidities, reflects the strategy of Netflix to keep its leadership in terms of content while being able to insure its desire of global...