Corporate Reporting & Finance
A: Business Valuation
Compose a memo to the Board of Directors of Monsoft covering the following topics:
1. Calculate the 2022 value of Monsoft by applying the following three methods:
• 1. Discounted Cashflow (DCF) with terminal value based on Price/Sales multiple applied current TTM (Trailing Twelve Month) revenue
o The DCF will use the forward years projections up to 2024
o Assume that there is no depreciation, investment, or interest but if there is a tax liability, that is, if the company is profitable – assume the UK corporate tax rate is 19%
• 2. Forward P/E valuation, – Apply the same assumptions as for the DCF to determine what an implied post tax earnings figure would be for Monsoft in 2022 and apply the relevant PE multiple
• 3. Price/Sales include an advantage and disadvantage of each valuation technique
2. Assuming Plutus hits the $20m revenue target and the new revenue multiple is applied, calculate the value in GBP of the equity stake the owners of Monsoft would have in Plutus.
3. Compare and contrast the Plutus and Victors offers from Tim Bennis and Growth Partners perspective? Using the information provided, please suggest an alternative scenario whereby both Tim Bennis and Growth Partners goals can be met and Monsoft has sufficient funding for its growth.
4. Describe the specific sectoral considerations when valuing a software company and to provide a recommendation on what a reasonable value the company should be based on your calculations and research
Consult the following resource:
B: Business Financing
Assume the perspective of a Risk Officer and compose a memo for the specialist venture debt bank outlining why a Management Buy-Out (MBO) is an attractive option for managers. Identify and explain the specific risks of providing debt to Monsoft? How could the bank mitigate these risks?
C: Business Disposal
You are a corporate finance advisor working for Plutus. Write an email to Plutus’s CEO identifying the critical steps involved in an acquisition process after the target has been identified. Explain what you think are the critical items of what Plutus needs to conduct on Monsoft.
