Topics in Corporate Finance
Case Report: The Hertz Corporation (A)
Due Date: Sunday, November 15
It should be typed, double spaced with Times New Roman size 12.
Discuss the following questions in your report (provide calculations + equations used):
- Write a brief intro about what you are going to write about.
- How much value do you expect to be created in the transaction envisioned by CD&R?
- Operating changes
- Capital structure changes
- How does the proposed transaction structure developed by CD&R and its partners help or hinder the realization of anticipated sources of value in the deal?
Examine the deal structure:
- Compare Hertz as a subsidiary of Ford to
- Hertz is independent public company (e.g., if IPOed) to
- Proposed LBO structure.
- Is the proposed LBO structure as stable, flexible, liquid etc. as CD&R claims?
- What is “Corporate EBITDA” in the context of the proposed deal structure?
- Use the Enterprise Multiple method to value the sponsors’ equity at time of exit.
(Supplemental information: 2010 Corporate EBITDA 1590.8 million; Exit Multiple 6-8; 2010 Corporate Debt 3498.3 million)
- Calculate the sponsors’ IRR on their equity investment.
- How much should CCM bid on September 5?
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