Brazos

Brazo 1. Is cheddar cheeses an attractive coronation? Did Brazos underpay, overpay or get it just right in their sign enthronization? The proposed LBO deal of Cheddars is an attractive investment for Brazos because it fits into Brazos tasty spot- a reasonable outlayd follow with cheering bullion flow and good management. Cheddars had al demeanors been economic through that it had ever closed a converge along-owned store and had shown fast(a) increases in sales and customer counts over time. to a fault it has a source of income from its franchise stores which could grow at a swift rate. Cheddars estimated EBITDA was $12.0 trillion in 2003 and it had a projected EBITDA of $18.9 million in 2007. Cheddars in addition had an bonnie EBITDAR of $1,027k which was much higher(prenominal)(prenominal) than its competitor Chilis which was $723k. At the leverage price of $60.5 million, we spate also confirm that the Market c be for/EBITDA (5.4) of Cheddars is higher than its competitors (2.6) when we comp ar multiple ratios, which room Cheddars is overvalued. 2. What are your major concerns with the proposed deal? Should Brazos accept the fraternity to sell the managers some stock? Is the real terra firma concomitant a good idea? If the managers pervert much stock, what is the conquer price?

There are two major concerns which are gaining competitive advantage and determining comparable valuations. Brazos should allow the company to sell the managers some stock of the business to benefit the managers. that the metre that a manager can hold stocks should be expres sage because the ownership would be split in! this way as it is non good for Brazos itself to decrease its ownership. The real estate subsidiary is a good idea that Brazos could purchase it as an summation and they can still control the operation and employees. Since Brazos can not only buy tangible pluss but also intangibles asset which is Goodwill $34.7 million. Brazos could amortize it and have tax benefit. If the managers buy more stock, the price given should...If you want to get a secure essay, order it on our website: BestEssayCheap.com

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