Brazos

Brazo 1. Is cheddar cheeses an attractive coronation? Did Brazos underpay, pay or get it just right in their initial investiture? The proposed LBO deal of Cheddars is an attractive investment for Brazos because it fits into Brazos tasty spot- a reasonable outlayd follow with firm bullion flow and good management. Cheddars had al demeanors been economic through that it had ever closed a mold along-owned store and had shown fast(a) increases in sales and customer counts over time. as well as it has a source of income from its franchise stores which could grow at a swift rate. Cheddars estimated EBITDA was $12.0 jillion in 2003 and it had a projected EBITDA of $18.9 million in 2007. Cheddars in addition had an arrive EBITDAR of $1,027k which was much higher(prenominal)(prenominal) than its competitor Chilis which was $723k. At the purchase price of $60.5 million, we spate also confirm that the Market repute/EBITDA (5.4) of Cheddars is higher than its competi tors (2.6) when we comp ar multiple ratios, which elbow room Cheddars is overvalued. 2. What atomic number 18 your major concerns with the proposed deal? Should Brazos bear the attach to to sell the managers some stock? Is the real terra firma supplementary a good idea? If the managers pervert much stock, what is the cling to price?

There are two major concerns which are gaining competitive advantage and determining comparable valuations. Brazos should allow the company to sell the managers some stock of the business to benefit the managers. that the amount that a manager can hold stocks should b e express mail because the ownership would ! be split in this way as it is non good for Brazos itself to decrease its ownership. The real estate auxiliary is a good idea that Brazos could purchase it as an plus and they can still control the operation and employees. Since Brazos can not only buy tangible assets but also intangibles asset which is Goodwill $34.7 million. Brazos could amortize it and have tax benefit. If the managers buy more stock, the price given should...If you want to get a adept essay, order it on our website: BestEssayCheap.com

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