Case 43

Fin 689

Case One

Flinder Valves and Controls Inc. (Bruner case # 43)

A Valuation Analysis

You will be required to submit a 4 page analysis, not including footnotes, appendices, and supporting spread sheets, etc., for this case in class # 5 (6/13). We will discuss this case in detail in class on that date a you will be called upon to support your logic and any assumptions you made. Here are a few questions to help you organize your thoughts.

1. What is FVC worth? What is its intrinsic value (based on comps and DCF)? What are the key value drivers? What assumptions did you make in your determination.

2. What opening price do you think Flinder should offer to sell the company to RSE? Back up your reasoning.

3. At what price should FVC walk away from the negotiation? How did you estimate those values? How are they different from the intrinsic value(s) you calculated.

Your analysis should be based on historical trends and calculations only. While some qualitative analysis is necessary, it will not be satisfactory to only make a qualitative determination. Your determination should be backed by facts and calculations. Be sure to clearly show the assumptions you used in the calculations. This can usually be accomplished by using footnotes and appendices carefully.

Your analysis should be in the format of a running commentary. While I would like most/all the issues addressed, above, I do not want to see this report in a question and answer format.

Your grade will be based on how well you organize the commentary of your analysis (with particular emphasis on backing up your assertions with calculations, assumptions etc.), how clearly you provide me with the content points listed above, the clarity and soundness of your assumptions in an overall analytic framework. This case counts for 20% of your total grade. For many of you, this is your first comprehensive case analysis, which I recognize and understand in evaluating...