Brazos Partners And Cheddar's Inc. Case Study Solutions

Projected Financials as of April 2003Same-store salesNew company-owned store salestotal company-owned salesSame store franchise incomenew franchise store incometotal franchise incomeTotal RevenueCost of salesGross Profitpre corporate overhead EBITDACorporate Expense EBITDAAdjustmentsAdjused EBITDARestaurant Operating Expenses (a)RE Lease ExpenseTax rate Company Onwed StoresFranchise storesTotal StoresFranchise RevenueRevenue% changeAdjusted EBITDAMaintenance CAPEXGrowth CAPEXTotal DebtInterest rate on debtSources and Uses of Funds for 2003 TransactionUsesPurchase AssetsFees & expenses TotalSourcesSenior DebtBrazos EquityMgmt equityTotal equityEst May LTM EBITDA xRevenue GriwthEBITDA MarginCheddar's Performance Since AcquisitonGoodwillAmortizationAmortization paAfter tax savingsmgmt repurchaseDepreciationInterestRfAverage betaS&P 500 return ap 2003 approxPPE CheddarDepreciation 20 yrs)EBITNet EarningsFCFF1+keTVPVUnlevered Firm ValueEBITDA Multiplewith EBITsame entry mutlipleTax shieldKdFirm ValueEquity ValueWith EBITDAInitial # sharesAcquisition price$ / share$ / share based on acquisitionIndustry Multiple (2004)They underpaidApplebeesocharleybrinkerrubyOutbackDebtBeta (2003)Beta sept 2004DamodaranAverage beta (sept 2004)Unlevered 2004Ke unlevered 2004Rf (T bond) damodaranERP (damodaran) 2003ERP 2004 damodarandCheddar's unlevered KeTotal CAPEXPV FCFFadjusted discountingCash flows projected at mid yearUnder Leaseback StrategyEBITDA *(1-tax)EBITDA (assumption)Equity Value relevered