Final Case

Topics: Corporate finance, Discounted cash flow, Finance, Logic, Free cash flow, Leveraged buyout / Pages: 2 (387 words) / Published: Dec 8th, 2013
Final Case Write Up Details
“Toys “R” Us LBO”

Due Date: Last day of class (December 10, 2010)

Teams: 1 or 2 students.

Write up: This write up should be done as if you were submitting it to a superior at work. Thus you should state your main conclusions early and clearly. Messy and long exhibits should be kept to a minimum and placed in the back. Your assumptions and work in general should be easy to follow and well organized. The write up should be long enough that your arguments are clearly made and your analysis is well outlined, but not so long as to be sprawling and unwieldy.

Grading: Grades will be determined as a combination of my sense of the effort you put into the case, the analysis conducted, and the clarity and presentation of the work. Small errors will not count against you. I have provided you questions to consider as you write up your analysis. While a good case will almost certainly answer most or all of these questions, note also that the questions below are merely a guide. Creativity is encouraged and you can go in other directions that you think are interesting or in more detail in certain areas of interest.

Questions to Consider as you Write Up your Case:

What are the risks and merits of the proposed transaction? What are the relevant industry dynamics affecting the firm? What due diligence questions would you want to ask the firm?

If you were conducting a private equity investment, would you prefer a club deal, or prefer to operate alone?

What are the exit alternatives for this investment?

Create a DCF Model for Toys R Us. Also, add an LBO analysis by including the debt payments on principal and interest to evaluate the firm’s ability to service a large amount of debt from its free cash flows. Make projections you feel are reasonable given the information provided, and provide sensitivity analysis to some of your key assumptions.

What do you think is an appropriate discount rate for this

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