SlideShare une entreprise Scribd logo
1  sur  18
Télécharger pour lire hors ligne
Barkley Enterprises
M&A Analysis
Anuj Patel
George Mason University
Finance 302-001
Executive Summary
 Barkley Enterprises
 Family-owned private consumer good company consisting of
two separate business lines:
 Snacks and Personal Hygiene

 Management team has decided to sell each division separately

to maximize proceeds due to higher synergies obtainable
 This analysis will mostly focus on selling Personal Hygiene

 Personal Hygiene Division
 Market Comparables Valuation indicates enterprise value range
of $431,982-$547,246 thousands, but valuations through
discounted cash flows model and synergies consideration show
an increase in value
 Recommend the sale of this division to a large industry such as
Procter & Gamble
 Possible realizable transaction between $544,365MM to $761,025MM
Company Overview
 Barkley is a private consumer goods company

that is family-owned and operated since 1935
 Headquartered in Atlanta, GA with a work force of

3,500 employees
 Manufactures its own products and sells them in
North and South America
 Contains two separate business lines:
 Snacks (2013 Revenue: $759MM, 2013 EBITDA: $140MM)
 Personal Hygiene (2013 Revenue: $243MM, 2013 EBITDA:

$360MM)
Economy and Outlook
 Personal care products are less sensitive to economic

conditions
 Recovering U.S. economy has increased

competitiveness due to lack of consumer spending
 Positive growth in employment and real wages have

given consumers extra spending power
 S&P Economics forecast that real personal

consumption would grow by 2.5% in 2013
Reference:
http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIn
dustrySurvey.do?code=hnd
Economy and Outlook (cont.)
•Disposable income determines the amount of money consumers can
spend on goods
•Historical data shows that quantity of household products consumed
remains steady even through different levels of disposable income

Reference:
http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIndustrySurvey.do?code
=hnd
Industry and Outlook
 Projected 2013 industry revenue: $49B
 Annual Growth: -2.4%
 Although negative annual growth, economic

recovery will push industry to further growth
 Increase in disposable income will increase

consumption of essentials and non-essentials
 Higher growth potential in emerging markets
 U.S. and Western Europe have reached a mature point and

a slower growth phase
Reference:
Cosmetic & Beauty Products Manufacturing Market Research Report | NAICS 32562 | Nov 2013
http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIndustry
Survey.do?code=hnd
Industry and Outlook
 Private labels are an important factor in this

industry
 Increased demand in private labels from retail

companies in order to develop loyal customers
 Private label products becoming popular because of
similar quality but lower cost
 On average priced 29% lower than branded products

Reference:
http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIndustrySurvey.do?code
=hnd
Market Comparables Valuation
•Market Comparables contains publicly traded companies in the
Personal Hygiene industry
• Comparables may be larger companies compared to Barkley
enterprises, but generally produce similar products
•EV/EBITDA multiples implies a valuation range of $432MM to
$547MM
Financial Projections
 2014-2017 Assumptions
 Net Working Capital remains constant at 8% of

revenue
 Branded products’ growth in revenue remains
constant at 2%
 Private label products’ growth in revenue increases
annually by 10 bps starting 2016; due to increase in
demand of private label products
 Expenses change by the average change in
historical data
 COGS increases by average of 20 bps

 S&M decreases by average of 40 bps
 G&A decreases by average 20 bps
 Depreciation decreases by average 6 bps
 CAPEX decreases by average 1 bps
Consolidated Forecast
WACC Calculation

*Assumptions made from Damodaran:
http://people.stern.nyu.edu/adamodar/
Discounted Cash Flow
•Using calculated WACC of 9.28
•Assuming Terminal Growth of 5% calculated from 2-stage growth model
•-From DCF model, a valuation range of $468MM to $654MM is obtained
Synergies Assumptions
 Barkley can expect a higher valuation than the

intrinsic valuation due to the following revenue
and cost synergy opportunities:
 Revenues of Branded Product and Private Label

Revenue will increase by 1%
 Annual reductions to G&A by 2% (as percentage of
revenue)
 Procurement Savings increase Gross Margin by
1.5%
DCF with Potential Synergies
•Use calculated WACC of 9.28% and Terminal Growth rate of 5%
•Valuation of DCF with synergies range between $544MM to
$761MM
Potential Buyer – Unilever
 Unilever is an Anglo-Dutch multinational consumer

goods company based in London, UK
 Market Cap: $119.48B

 Unilever’s categories of operations include:
 Personal care, foods, home care, and refreshments

 Unilever’s popular products include:
 Dove, Axe, TRESemme, Sunsilk

Reference: Unilever Annual Reports and Accounts 2013
Potential Buyer – Procter &
Gamble
 P&G is multinational consumer goods company

based in Cincinnati, Ohio
 Market Cap: $228.93B

 P&G’s operating segments include:
 Beauty, Grooming, Health Care, Home Care, and

Family Care
 P&G’s popular products include:
 Gillette, Pantene, Head & Shoulders

Reference: Procter & Gamble 2013 Annual Report 10K
Recommendation
 Ideal Buyer – Unilever
 A company with popular personal hygiene products

like axe, dove, and TRESemme
 42% of Unilever’s operating profit comes from
personal care, so will gain more benefits from
synergy opportunities
 Great opportunity for Unilever to develop more
private label products in the U.S.
 Demand for private label products is on the rise according

to industry reports
Recommendation (cont.)
 Division Valuation Range
 Market Comparables: $432MM to $547MM
 Discounted Cash Flows: $468MM to $654MM
 DCF + Synergies: $544MM to $761MM
 Recommendation
 Consider Market Comparables value of $432MM as minimum

 Discounted Cash Flows with synergies consists of ideal value range

of $544MM to $761MM

Contenu connexe

Tendances

Beauty and Personal Care in South Africa
Beauty and Personal Care in South AfricaBeauty and Personal Care in South Africa
Beauty and Personal Care in South AfricaReportsnReports
 
LG Household & Healthcare: Business Analysis
LG Household & Healthcare: Business AnalysisLG Household & Healthcare: Business Analysis
LG Household & Healthcare: Business AnalysisAyusha Mittal
 
Top 10 fmcg companies in india
Top 10 fmcg companies in indiaTop 10 fmcg companies in india
Top 10 fmcg companies in indiaRibu Roy
 
Global cosmetics market
Global cosmetics marketGlobal cosmetics market
Global cosmetics marketKaran Singh
 
Fast moving consumer goods
Fast moving consumer goodsFast moving consumer goods
Fast moving consumer goodsSneha Godse
 
McLean Ltd Report_Recovered
McLean Ltd Report_RecoveredMcLean Ltd Report_Recovered
McLean Ltd Report_RecoveredSara Young
 
Beauty and Personal Care in Greece
Beauty and Personal Care in GreeceBeauty and Personal Care in Greece
Beauty and Personal Care in GreeceReportsnReports
 
Beauty and Personal Care in Austria
Beauty and Personal Care in AustriaBeauty and Personal Care in Austria
Beauty and Personal Care in AustriaReportsnReports
 
Beauty and Personal Care in Canada
Beauty and Personal Care in CanadaBeauty and Personal Care in Canada
Beauty and Personal Care in CanadaReportsnReports
 
GECO6410-M1-Wang
GECO6410-M1-WangGECO6410-M1-Wang
GECO6410-M1-WangAngie Wang
 
Beauty and Personal Care in Hong Kong, China
Beauty and Personal Care in Hong Kong, ChinaBeauty and Personal Care in Hong Kong, China
Beauty and Personal Care in Hong Kong, ChinaReportsnReports
 
Project X: Beauty and Personal Care Analysis
Project X: Beauty and Personal Care AnalysisProject X: Beauty and Personal Care Analysis
Project X: Beauty and Personal Care AnalysisPatrick (Pat) Harlow
 
Marketing Pres
Marketing PresMarketing Pres
Marketing Presrajan.dbg
 
Apparel in hong kong, china
Apparel in hong kong, chinaApparel in hong kong, china
Apparel in hong kong, chinabenturner06
 
Enviornmental scanning for hul
Enviornmental scanning for hulEnviornmental scanning for hul
Enviornmental scanning for hulMandeep Raj
 
Beauty and Personal Care in Morocco
Beauty and Personal Care in MoroccoBeauty and Personal Care in Morocco
Beauty and Personal Care in MoroccoReportsnReports
 
A Study on FMCG by Tushar N. Chole
A Study on FMCG by Tushar N. CholeA Study on FMCG by Tushar N. Chole
A Study on FMCG by Tushar N. CholeTushar Cholepatil
 
MBC 618 hershey assignment
MBC 618 hershey assignment MBC 618 hershey assignment
MBC 618 hershey assignment Suya Wang
 

Tendances (20)

Beauty and Personal Care in South Africa
Beauty and Personal Care in South AfricaBeauty and Personal Care in South Africa
Beauty and Personal Care in South Africa
 
LG Household & Healthcare: Business Analysis
LG Household & Healthcare: Business AnalysisLG Household & Healthcare: Business Analysis
LG Household & Healthcare: Business Analysis
 
Top 10 fmcg companies in india
Top 10 fmcg companies in indiaTop 10 fmcg companies in india
Top 10 fmcg companies in india
 
Global cosmetics market
Global cosmetics marketGlobal cosmetics market
Global cosmetics market
 
Fast moving consumer goods
Fast moving consumer goodsFast moving consumer goods
Fast moving consumer goods
 
McLean Ltd Report_Recovered
McLean Ltd Report_RecoveredMcLean Ltd Report_Recovered
McLean Ltd Report_Recovered
 
Beauty and Personal Care in Greece
Beauty and Personal Care in GreeceBeauty and Personal Care in Greece
Beauty and Personal Care in Greece
 
Home Care in India
Home Care in IndiaHome Care in India
Home Care in India
 
Soft Drinks in Slovenia
Soft Drinks in SloveniaSoft Drinks in Slovenia
Soft Drinks in Slovenia
 
Beauty and Personal Care in Austria
Beauty and Personal Care in AustriaBeauty and Personal Care in Austria
Beauty and Personal Care in Austria
 
Beauty and Personal Care in Canada
Beauty and Personal Care in CanadaBeauty and Personal Care in Canada
Beauty and Personal Care in Canada
 
GECO6410-M1-Wang
GECO6410-M1-WangGECO6410-M1-Wang
GECO6410-M1-Wang
 
Beauty and Personal Care in Hong Kong, China
Beauty and Personal Care in Hong Kong, ChinaBeauty and Personal Care in Hong Kong, China
Beauty and Personal Care in Hong Kong, China
 
Project X: Beauty and Personal Care Analysis
Project X: Beauty and Personal Care AnalysisProject X: Beauty and Personal Care Analysis
Project X: Beauty and Personal Care Analysis
 
Marketing Pres
Marketing PresMarketing Pres
Marketing Pres
 
Apparel in hong kong, china
Apparel in hong kong, chinaApparel in hong kong, china
Apparel in hong kong, china
 
Enviornmental scanning for hul
Enviornmental scanning for hulEnviornmental scanning for hul
Enviornmental scanning for hul
 
Beauty and Personal Care in Morocco
Beauty and Personal Care in MoroccoBeauty and Personal Care in Morocco
Beauty and Personal Care in Morocco
 
A Study on FMCG by Tushar N. Chole
A Study on FMCG by Tushar N. CholeA Study on FMCG by Tushar N. Chole
A Study on FMCG by Tushar N. Chole
 
MBC 618 hershey assignment
MBC 618 hershey assignment MBC 618 hershey assignment
MBC 618 hershey assignment
 

Similaire à Barkley enterprises m&a analysis

Strategic Management in P&G
Strategic Management in P&GStrategic Management in P&G
Strategic Management in P&Gfalak nawaz
 
Presentation p&g final
Presentation p&g finalPresentation p&g final
Presentation p&g finalabumuiz82
 
Clorox Pitch Book Final - Zephyr Group
Clorox Pitch Book Final - Zephyr GroupClorox Pitch Book Final - Zephyr Group
Clorox Pitch Book Final - Zephyr GroupRobert J. Liu
 
Marketing case study on procter & gamble (P&G)
Marketing case study on procter & gamble (P&G)Marketing case study on procter & gamble (P&G)
Marketing case study on procter & gamble (P&G)Rahbar Haque
 
What Are The Changes And Trends Of The Total Market
What Are The Changes And Trends Of The Total MarketWhat Are The Changes And Trends Of The Total Market
What Are The Changes And Trends Of The Total MarketSusan Cox
 
Barrows Consumer Products Essay
Barrows Consumer Products EssayBarrows Consumer Products Essay
Barrows Consumer Products EssayNicole King
 
Introduction to sas
Introduction to sas Introduction to sas
Introduction to sas Zienab Allam
 
Wiikano orchards Harvard Case Report
Wiikano orchards Harvard Case ReportWiikano orchards Harvard Case Report
Wiikano orchards Harvard Case ReportAnahit Babayan
 
Case study - Transaction pricing in a recessionary economy
Case study - Transaction pricing in a recessionary economyCase study - Transaction pricing in a recessionary economy
Case study - Transaction pricing in a recessionary economyDeepankar Boro
 
Estée Lauder Equity Research Report
Estée Lauder Equity Research ReportEstée Lauder Equity Research Report
Estée Lauder Equity Research ReportAlexander Lai
 
Natural Personal Care 2010 Global Series - Brochure
Natural Personal Care 2010 Global Series - BrochureNatural Personal Care 2010 Global Series - Brochure
Natural Personal Care 2010 Global Series - BrochureKline and Company
 
Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...
Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...
Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...Wenting Zhang, PMP
 
WDFC Equity Report SDSU
WDFC Equity Report SDSUWDFC Equity Report SDSU
WDFC Equity Report SDSUHongliao Xiong
 
Nike Supply Chain Essay
Nike Supply Chain EssayNike Supply Chain Essay
Nike Supply Chain EssayJamie Boyd
 
Natural Personal Care 2011 - Brochure
Natural Personal Care 2011 - BrochureNatural Personal Care 2011 - Brochure
Natural Personal Care 2011 - BrochureKline and Company
 

Similaire à Barkley enterprises m&a analysis (20)

Analysis Of Amul
Analysis Of AmulAnalysis Of Amul
Analysis Of Amul
 
Strategic Management in P&G
Strategic Management in P&GStrategic Management in P&G
Strategic Management in P&G
 
Presentation p&g final
Presentation p&g finalPresentation p&g final
Presentation p&g final
 
Clorox Pitch Book Final - Zephyr Group
Clorox Pitch Book Final - Zephyr GroupClorox Pitch Book Final - Zephyr Group
Clorox Pitch Book Final - Zephyr Group
 
Marketing case study on procter & gamble (P&G)
Marketing case study on procter & gamble (P&G)Marketing case study on procter & gamble (P&G)
Marketing case study on procter & gamble (P&G)
 
Kraft Foods Essay
Kraft Foods EssayKraft Foods Essay
Kraft Foods Essay
 
What Are The Changes And Trends Of The Total Market
What Are The Changes And Trends Of The Total MarketWhat Are The Changes And Trends Of The Total Market
What Are The Changes And Trends Of The Total Market
 
Barrows Consumer Products Essay
Barrows Consumer Products EssayBarrows Consumer Products Essay
Barrows Consumer Products Essay
 
Introduction to sas
Introduction to sas Introduction to sas
Introduction to sas
 
Wiikano orchards Harvard Case Report
Wiikano orchards Harvard Case ReportWiikano orchards Harvard Case Report
Wiikano orchards Harvard Case Report
 
Case study - Transaction pricing in a recessionary economy
Case study - Transaction pricing in a recessionary economyCase study - Transaction pricing in a recessionary economy
Case study - Transaction pricing in a recessionary economy
 
Estée Lauder Equity Research Report
Estée Lauder Equity Research ReportEstée Lauder Equity Research Report
Estée Lauder Equity Research Report
 
Natural Personal Care 2010 Global Series - Brochure
Natural Personal Care 2010 Global Series - BrochureNatural Personal Care 2010 Global Series - Brochure
Natural Personal Care 2010 Global Series - Brochure
 
Johnson & Johnson pp
Johnson & Johnson ppJohnson & Johnson pp
Johnson & Johnson pp
 
hll
hllhll
hll
 
WDFC Equity Report 2016
WDFC Equity Report 2016WDFC Equity Report 2016
WDFC Equity Report 2016
 
Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...
Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...
Marketing Proposal with chemical manufacturing and pharmaceuticals manufactur...
 
WDFC Equity Report SDSU
WDFC Equity Report SDSUWDFC Equity Report SDSU
WDFC Equity Report SDSU
 
Nike Supply Chain Essay
Nike Supply Chain EssayNike Supply Chain Essay
Nike Supply Chain Essay
 
Natural Personal Care 2011 - Brochure
Natural Personal Care 2011 - BrochureNatural Personal Care 2011 - Brochure
Natural Personal Care 2011 - Brochure
 

Dernier

The Pension Regulator's "desputed numbers"
The Pension Regulator's "desputed numbers"The Pension Regulator's "desputed numbers"
The Pension Regulator's "desputed numbers"Henry Tapper
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfMichael Silva
 
Shrambal_Distributors_Newsletter_Mar_2024.pdf
Shrambal_Distributors_Newsletter_Mar_2024.pdfShrambal_Distributors_Newsletter_Mar_2024.pdf
Shrambal_Distributors_Newsletter_Mar_2024.pdfvikashdidwania1
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdfAdnet Communications
 
CLUB DEAL - DECK INVESTOR
CLUB DEAL - DECK INVESTORCLUB DEAL - DECK INVESTOR
CLUB DEAL - DECK INVESTORhnaour
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptxFinTech Belgium
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
ENT ospe 1 .pdf .....good and easy for medical
ENT ospe 1 .pdf .....good and easy for medicalENT ospe 1 .pdf .....good and easy for medical
ENT ospe 1 .pdf .....good and easy for medicalabaidurrehman0546
 
CLUB DEAL -DECK INVESTOR
CLUB DEAL -DECK INVESTORCLUB DEAL -DECK INVESTOR
CLUB DEAL -DECK INVESTORhnaour
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfMichael Silva
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismBrian Lin
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 

Dernier (20)

The Pension Regulator's "desputed numbers"
The Pension Regulator's "desputed numbers"The Pension Regulator's "desputed numbers"
The Pension Regulator's "desputed numbers"
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdf
 
Effects & Policies Of Bank Consolidation
Effects & Policies Of Bank ConsolidationEffects & Policies Of Bank Consolidation
Effects & Policies Of Bank Consolidation
 
Shrambal_Distributors_Newsletter_Mar_2024.pdf
Shrambal_Distributors_Newsletter_Mar_2024.pdfShrambal_Distributors_Newsletter_Mar_2024.pdf
Shrambal_Distributors_Newsletter_Mar_2024.pdf
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
 
CLUB DEAL - DECK INVESTOR
CLUB DEAL - DECK INVESTORCLUB DEAL - DECK INVESTOR
CLUB DEAL - DECK INVESTOR
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptx
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
ENT ospe 1 .pdf .....good and easy for medical
ENT ospe 1 .pdf .....good and easy for medicalENT ospe 1 .pdf .....good and easy for medical
ENT ospe 1 .pdf .....good and easy for medical
 
CLUB DEAL -DECK INVESTOR
CLUB DEAL -DECK INVESTORCLUB DEAL -DECK INVESTOR
CLUB DEAL -DECK INVESTOR
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdf
 
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 

Barkley enterprises m&a analysis

  • 1. Barkley Enterprises M&A Analysis Anuj Patel George Mason University Finance 302-001
  • 2. Executive Summary  Barkley Enterprises  Family-owned private consumer good company consisting of two separate business lines:  Snacks and Personal Hygiene  Management team has decided to sell each division separately to maximize proceeds due to higher synergies obtainable  This analysis will mostly focus on selling Personal Hygiene  Personal Hygiene Division  Market Comparables Valuation indicates enterprise value range of $431,982-$547,246 thousands, but valuations through discounted cash flows model and synergies consideration show an increase in value  Recommend the sale of this division to a large industry such as Procter & Gamble  Possible realizable transaction between $544,365MM to $761,025MM
  • 3. Company Overview  Barkley is a private consumer goods company that is family-owned and operated since 1935  Headquartered in Atlanta, GA with a work force of 3,500 employees  Manufactures its own products and sells them in North and South America  Contains two separate business lines:  Snacks (2013 Revenue: $759MM, 2013 EBITDA: $140MM)  Personal Hygiene (2013 Revenue: $243MM, 2013 EBITDA: $360MM)
  • 4. Economy and Outlook  Personal care products are less sensitive to economic conditions  Recovering U.S. economy has increased competitiveness due to lack of consumer spending  Positive growth in employment and real wages have given consumers extra spending power  S&P Economics forecast that real personal consumption would grow by 2.5% in 2013 Reference: http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIn dustrySurvey.do?code=hnd
  • 5. Economy and Outlook (cont.) •Disposable income determines the amount of money consumers can spend on goods •Historical data shows that quantity of household products consumed remains steady even through different levels of disposable income Reference: http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIndustrySurvey.do?code =hnd
  • 6. Industry and Outlook  Projected 2013 industry revenue: $49B  Annual Growth: -2.4%  Although negative annual growth, economic recovery will push industry to further growth  Increase in disposable income will increase consumption of essentials and non-essentials  Higher growth potential in emerging markets  U.S. and Western Europe have reached a mature point and a slower growth phase Reference: Cosmetic & Beauty Products Manufacturing Market Research Report | NAICS 32562 | Nov 2013 http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIndustry Survey.do?code=hnd
  • 7. Industry and Outlook  Private labels are an important factor in this industry  Increased demand in private labels from retail companies in order to develop loyal customers  Private label products becoming popular because of similar quality but lower cost  On average priced 29% lower than branded products Reference: http://www.netadvantage.standardandpoors.com.mutex.gmu.edu/NASApp/NetAdvantage/showIndustrySurvey.do?code =hnd
  • 8. Market Comparables Valuation •Market Comparables contains publicly traded companies in the Personal Hygiene industry • Comparables may be larger companies compared to Barkley enterprises, but generally produce similar products •EV/EBITDA multiples implies a valuation range of $432MM to $547MM
  • 9. Financial Projections  2014-2017 Assumptions  Net Working Capital remains constant at 8% of revenue  Branded products’ growth in revenue remains constant at 2%  Private label products’ growth in revenue increases annually by 10 bps starting 2016; due to increase in demand of private label products  Expenses change by the average change in historical data  COGS increases by average of 20 bps  S&M decreases by average of 40 bps  G&A decreases by average 20 bps  Depreciation decreases by average 6 bps  CAPEX decreases by average 1 bps
  • 11. WACC Calculation *Assumptions made from Damodaran: http://people.stern.nyu.edu/adamodar/
  • 12. Discounted Cash Flow •Using calculated WACC of 9.28 •Assuming Terminal Growth of 5% calculated from 2-stage growth model •-From DCF model, a valuation range of $468MM to $654MM is obtained
  • 13. Synergies Assumptions  Barkley can expect a higher valuation than the intrinsic valuation due to the following revenue and cost synergy opportunities:  Revenues of Branded Product and Private Label Revenue will increase by 1%  Annual reductions to G&A by 2% (as percentage of revenue)  Procurement Savings increase Gross Margin by 1.5%
  • 14. DCF with Potential Synergies •Use calculated WACC of 9.28% and Terminal Growth rate of 5% •Valuation of DCF with synergies range between $544MM to $761MM
  • 15. Potential Buyer – Unilever  Unilever is an Anglo-Dutch multinational consumer goods company based in London, UK  Market Cap: $119.48B  Unilever’s categories of operations include:  Personal care, foods, home care, and refreshments  Unilever’s popular products include:  Dove, Axe, TRESemme, Sunsilk Reference: Unilever Annual Reports and Accounts 2013
  • 16. Potential Buyer – Procter & Gamble  P&G is multinational consumer goods company based in Cincinnati, Ohio  Market Cap: $228.93B  P&G’s operating segments include:  Beauty, Grooming, Health Care, Home Care, and Family Care  P&G’s popular products include:  Gillette, Pantene, Head & Shoulders Reference: Procter & Gamble 2013 Annual Report 10K
  • 17. Recommendation  Ideal Buyer – Unilever  A company with popular personal hygiene products like axe, dove, and TRESemme  42% of Unilever’s operating profit comes from personal care, so will gain more benefits from synergy opportunities  Great opportunity for Unilever to develop more private label products in the U.S.  Demand for private label products is on the rise according to industry reports
  • 18. Recommendation (cont.)  Division Valuation Range  Market Comparables: $432MM to $547MM  Discounted Cash Flows: $468MM to $654MM  DCF + Synergies: $544MM to $761MM  Recommendation  Consider Market Comparables value of $432MM as minimum  Discounted Cash Flows with synergies consists of ideal value range of $544MM to $761MM