BAIN DOLLARAMA LBO
DOLLARAMA LBO
TO: BAIN CAPITAL
FROM: ANALYST GROUP
MICHAEL MALO
SEBASTIEN HUBERT
IVANINA MINCHEVA
SUBJECT: INVESTOR RETURNS
DATE: NOVEMBER 20th, 2004
DOLLARAMA LBO
TO: BAIN CAPITAL
FROM: ANALYST GROUP
MICHAEL MALO
SEBASTIEN HUBERT
IVANINA MINCHEVA
SUBJECT: INVESTOR RETURNS
DATE: NOVEMBER 20th, 2004
TABLE OF CONTENTS
INTRODUCTION 4
INDEPENDENT VALUATION OF DOLLARAMA 5
POTENTIAL IMPROVEMENTS TO DOLLARAMA OPERATIONS 11
RECOMMENDATION 17
APPENDIX 19
INTRODUCTION
We are a group of consultants from Montreal hired by Bain Capital to assess the profitability of the Dollarama leverage buyout option and to determine whether or not Bain Capital should go on with this opportunity.
In this analysis, we will calculate the current estimate of the value of Dollarama, describe implementations that we could bring to Dollarama in order to increase sales, lower costs, improve on analysis and projections for the future as well as increase revenues and profits after the LBO. Additionally, our projections will be compared to the currently expected sales, revenues and profits to argue that the leverage buyout is a profitable opportunity that must be seized.
INDEPENDENT VALUATION OF DOLLARAMA BY BANK
The initial estimates of Dollarama fall between $900 and $1.2 billion. To come up with a realistic estimate of the price Bain should be willing to pay we need to understand better, what is the value of Dollarama to Bain in terms of exit and entry multiples i.e how much is Bain going to profit off its LBO of Dollarama, for a holding period of five years.
Bain should not overpay for Dollarama, if the latter is not able to generate enough growth to offset Bain’s initial investment.
To better understand therefore the value of Dollarama to Bain and how much Bain should be paying, we should determine the proper exit and entry multiples, based on Dollarama’s performance. We should next see how these multiples influence the purchase price of
TO: BAIN CAPITAL
FROM: ANALYST GROUP
MICHAEL MALO
SEBASTIEN HUBERT
IVANINA MINCHEVA
SUBJECT: INVESTOR RETURNS
DATE: NOVEMBER 20th, 2004
DOLLARAMA LBO
TO: BAIN CAPITAL
FROM: ANALYST GROUP
MICHAEL MALO
SEBASTIEN HUBERT
IVANINA MINCHEVA
SUBJECT: INVESTOR RETURNS
DATE: NOVEMBER 20th, 2004
TABLE OF CONTENTS
INTRODUCTION 4
INDEPENDENT VALUATION OF DOLLARAMA 5
POTENTIAL IMPROVEMENTS TO DOLLARAMA OPERATIONS 11
RECOMMENDATION 17
APPENDIX 19
INTRODUCTION
We are a group of consultants from Montreal hired by Bain Capital to assess the profitability of the Dollarama leverage buyout option and to determine whether or not Bain Capital should go on with this opportunity.
In this analysis, we will calculate the current estimate of the value of Dollarama, describe implementations that we could bring to Dollarama in order to increase sales, lower costs, improve on analysis and projections for the future as well as increase revenues and profits after the LBO. Additionally, our projections will be compared to the currently expected sales, revenues and profits to argue that the leverage buyout is a profitable opportunity that must be seized.
INDEPENDENT VALUATION OF DOLLARAMA BY BANK
The initial estimates of Dollarama fall between $900 and $1.2 billion. To come up with a realistic estimate of the price Bain should be willing to pay we need to understand better, what is the value of Dollarama to Bain in terms of exit and entry multiples i.e how much is Bain going to profit off its LBO of Dollarama, for a holding period of five years.
Bain should not overpay for Dollarama, if the latter is not able to generate enough growth to offset Bain’s initial investment.
To better understand therefore the value of Dollarama to Bain and how much Bain should be paying, we should determine the proper exit and entry multiples, based on Dollarama’s performance. We should next see how these multiples influence the purchase price of