Estimate Enterprise Value of LAB Research using FC

   1  5 pointsz Estimate Enterprise Value of LAB Research using FCFF approach, based on WACC equal to 11.3%.

Please attach a print out of excel filewith your calculations. Please attach the selected print out at the end of the case assignment copy.




2.	(5 points) Estimate Market Value of Equity of LAB Research based on DCF approach.



















3.	In the event of IPO what would be the market price of shares of the LAB Research divisions using valuation based on comparable company multiples? This is a quantitative question that is addressed in parts.
a.	(5 points) First you should identify comparable firms you are going base your analysis on. Be mindful of the fact that identification involves a tradeoff between finding better comparables versus number of comparable firms in the final sample. It is preferable to end up with a sample of at least 4-5 firms to mitigate the effect of outliers. Please provide your arguments for choosing/discarding some firms. Please list the final sample of the comparable firms. This is a conceptual question.





















b.	
i.	(10 points) Given the sample of your comparable firms, please estimate MVE of Lab Research based on EV/EBITDA multiple. Note that you will have two separate values based on information provided for 2005 and 2006 years. You can think of them as valuation range.








ii.	(5 points) Reassess the valuation range in 7.b.i. after applying small firm IPO discount of 20%.






4.	(5 points) Given your assessment of MVE of Lab Research using DCF valuation in part 6 and your assessment of MVE of Lab Research in part 7.b.ii, what would be your final recommendation for value of equity of Lab Research that can be raised in IPO?  This is a mostly qualitative question.






5.	In the event of an IPO what would be the market price of shares of the LAB Pharma division? 
a.	(5 points) Can DCF valuation be applied? Why of why not? This is a conceptual question. 











b.	Using Relative Valuation analysis (please refer to Exhibit 12) what is the value of Lab Pharma- equity?

i.	(5 points) First you need to choose among four provided categories a category that in your view closest to Lab Pharma. Please provide your argumentation for choosing that category.










ii.	(10 points) Based on the enterprise value of a comparable group chosen above, estimate the market value of Lab Pharma- equity. 
















6.	(5 points). Based on your assessment of Market value of equity of LAB research in (8) and market value of equity of Lab Pharma in (9.b.ii) what is your estimate of the discount placed on LAB International by the market?