FNCE 251 Lecture Notes - Lecture 6: Cash Flow, Sungard, Stock Dilution
Document Summary
Buyout offer for about billion (11x ebitda) Is sungard a good lbo candidate: conclusion: there is opportunity to use leverage because cf appear stable. Not sure there"s room for multiple expansion based on costs and pe value mix. Maybe there is room for operational improvements, but not yet obvious. Looking at projections : the projections appear to be relatively tentative compared to historical growth. This is excepted because the firm is getting larger, meaning it will not be able to continue large growth: margins are increasing each year, meaning you will be more and more profitable each year. Given that there is no clear operational improvement, we can question this increase. Or, we can assume that we can charge customers more as switching costs increases as customers become loyal. If this is true, historical margins should be increasing as well. If historical margins were not increasing, it is hard to justify an increase in margins.