In January 2012, Ellen Kullman, CEO and chairman of DuPont, must determine whether to retain or sell the organization 's Performance Coatings (DPC) division. This is an opening case on valuing a leveraged buyout.
The case asks pupils to compare the worth of the division if it continues under the control of DuPont or is sold to an outdoor party and focuses on a publicly listed corporation's decision to divest a big division. The case supplies a base-case adjusted present value (APV) model of DPC as a stand alone company and supplies students particular assignments to correct it to reflect the division's potential value under PE possession (e.g., EBITDA increase, multiple arbitrage, and increased leverage).
The case scenario is sketched out to detail and discuss the distinction between a public company's valuation relying on the unlevered free cash flows and the PE sponsor's valuation relying on residual (levered) cash flows. This case has been educated in a second-year elective course covering entrepreneurial finance and private equity and in an advanced undergraduate class on corporate finance. It is appropriate for use in courses on advanced corporate finance, private equity, or deal valuation.
PUBLICATION DATE: February 07, 2014 PRODUCT #: UV6790-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
Related Case Solutions & Analyses:
Financial Reporting Tax Reporting and the Role of Deferred Taxes
Baker Precision Instruments Inc.
Gillette Co.: Dry Idea Advertising (B) Video
Mylan Lab’s Proposed Merger with King Pharmaceutical (Abridged)
Berkshire Hathaway Inc.-Intercorporate Investments (B)
Crawford Development Co. and Southeast Bank of Texas
Rose Hanna (B)
Experiments in Public Procurement: Italy Buys in Bulk Sequel
PepsiCo’s Bid for Quaker Oats (A)
California PERS (B), Portuguese Version
