mercury athletic footwear case solution - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. The overhead costs after both the companies merge would be reduced significantly. footwear). FCF 7,049 21,305 24,022 27,086 30,540 Corporate overhead costs are cash charges therefore they have not been added back. The revenue growth would increase and the market share of the combined company would also increase. The strategic merit is that both companies Mercury and AGI, are footwear companies that attract the youth market. FCF 21,240 26,727 22,097 25,473 29,545 2006 2007 2008 2009 2010 2011 The valuation for Mercury Athletic Footwear has been performed by two different method. Harvard Business School Brief Case 094-050, September 2009. 2. Review the projections by Liedtke. Mercury Financial Valuation Case 2183 Words | 9 Pages. Reasons why Mercury is an appropriate target for AGI 4 2. The case utilizes the possible purchase Mercury Athletic as a tool to instructstudentsfundamental DCF (discounted cash flow) valuation with the use of the weighted average cost of capital (WACC). Mercury Athletic: Valuing the Opportunity is a Harvard Business (HBR) Case Study on Finance & Accounting , Fern Fort University provides HBR case study assignment help for just $11. Mercury Background 2003 - acquired by West Coast Fashions (WCF) Attempted brand extension through apparel line Business stalled Mercury CEO eager to return exclusively to footwear Four footwear product lines Men’s/Women’s athletic Men’s/Women’s casual 2006: Revenue - $431.1 million EBITDA - $51.8 million The valuation that has been performed in part D is based on the discounted cash flow methodology whereas the valuation that has been performed in part F is based on the multiple comparable method. SHORT TITLE OF PAPER (50 CHARACTERS OR LESS) 2 Mercury Athletic Case Analysis Liedtke has a decision to make. The last page of the Mercury Athletic case mentions at least two possible sources of value creation not captured in Liedtke’s base case scenario: a significant reduction in Mercury’s days sales in inventory (DSI) and a possible combination of Mercury’s and … This is just a sample partial case solution. This is the reason due to which both the valuation figures differ significantly. If the women’s line of business of Mercury is continued and incorporated in the valuation then it could increase the total enterprise. Mercury Athletic Case. Due to a strategic reorganization, the plan called for the divestiture of MA and other “non-core” WCF assets. In order to summarize, due to AGI’s small size, there is a strong risk of being overtaken by the other giant players in the market therefore, if it acquires Mercury, the risk will be minimized and there is a strong opportunity that the company will grow steadily. Description. Market index is the representation of systematic risk. Conservative or Aggressive? Mercury Athletic Footwear: Valuing the Opportunity Case Solution communicate just what they need to say and tell readers precisely what they’re likely to do. Q3) Estimate the value of Mercury using a discounted cash flow approach and Liedtke’s base case projections. This price per earnings ratio is used because it is the closest number that can match the market view of Mercury Athletic. Mercury Athletic: Valuing the Opportunity Case Study Solution. Fiore was forced to sell the company after running it for over 35 years, due to health problems. In this case, the cash inflow is the acquisition price, which used to purchase the Mercury Corporation. Mercury Athletic Footwear Case Solution. One of their segments was Mercury Athletic Footwear. Thisprice per earnings ratio is used because it is the closest number that can match the marketview of Mercury Athletic. Mercury was purchased by WCF in hopes to increase business revenue however this was not the case. In order to summarize, due to AGI’s small size, there is a strong risk of being overtaken by the other giant players in the market therefore, if it acquires Mercury, the risk will be minimized and there is a strong opportunity that the company will grow steadily. Mercury Athletic Footwear Case DCF VALUATION ANALYSIS Jianqiu … Reason. 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Bullock, Process Reengineering in Emerging Markets: An Automaker's Experience (B), Working Together Effectively Before It All Goes Downhill, Collective Bargaining and Negotiation at the University of Regina: General Overview and Private Information - Faculty, When the distribution network of both the companies would be combined, then. Enterprise Value 319,103, Based On Case Projection case solution for mercury athletic: valuing the opportunity Dear Students, Our tutors are available 24/7 to assist in your academic stuff, Our Professional writers are ready to serve you in services you need. If we look at the valuation of Mercury for the part D and part F, then a difference could be seen between the enterprise values. Investment in WC 20,674 15,916 17,945 20,234 22,815 4 a. Estimation of the weighted average cost of capital 5 b. Further, it has been assumed that after the year 2011, for 2012 and on wards the cash flows are going to be sustainable and grow at the same rate. Is Mercury an appropriate target for AGI? When students have the English-language PDF of this Brief Case in a coursepack, they will also have the option to purchase an audio version. Similarly, the operating expenses, depreciation and the corporate overhead expenses have also been calculated. Mercury Athletic. Revenues 479,329 489,028 532,137 570,319 597,717 Net FCF 7,049 21,305 24,022 27,086 433,790 Our case solution is based on Case Study Method expertise & … The library’s lower level is home to an extensive archival collection. The most important of these synergies are: With the available information, the calculation could be performed for the reduction in days sales in inventory. The revenue growth rate has been assumed based upon certain assumptions. The team finds this to be an appropriate estimation, but we also understand the limitations and possible inaccuracy of this value, which is a large weight in our enterprise value. MA had revenues of $431.1M and an EBITDA of $51.8M Luehrman, Timothy A., and Joel L. Heilprin. SECURE STACKS. Estimation the value of Mercury based on discounted cash flows and Liedtke’s base case projections. If we look at the valuation of Mercury for the part D and part F, then a difference could be seen between the enterprise values. However, the highest value for the enterprise has been calculated by the discounted cash flow method. "Mercury Athletic: Valuing the Opportunity." Download mercury athletic footwear case solution Comments. Mercury Athletic Footwear Case Study John Liedtke head of Active Gear, Inc. (AGI) is contemplating whether to invest in Mercury Athletic a subsidiary of West Coast Fashions (WCF). Although CAGR is a substitute,it not only accurately calculates a smooth risk of return, but does not have any risk variables in the formula. Partnerships could be formed with the suppliers of AGI and better terms could be agreed upon. AGI was founded in 1956 and started off by producing high quality specialty shoes for golf and tennis players. Therefore, the market risk premium in this case is only a representation of the possible expected return, and is not a calculation of risk. Actual If this assumption of 3% growth is inaccurate, and due to the terminal value estimating the values from a point in time to an infinite amount of years, we will have an infinite amount of inaccuracy or deviation from the actual value if we were able to compare the actual values over an infinite amount of years. If partnerships could be formed with the Chinese manufacturers then greater leverage could be realized. While … 8%. Subject: Valuation of Mercury Athletic Footwear. Enterprise Value 313,812, The enterprise value of Mercury based on historical information is $319,103, whereas on the basis of cash projection by Lied ke it is $313,812……………, This is just a sample partial work. 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