Advice for Hertz Case Study
Hertz Advice
Your due date for the Hertz case report and presentation is coming up soon. Here are a few comments about some of the case study questions:
Question 1: Discuss the pros and cons of selling Hertz versus issuing shares through an IPO. An IPO provides a useful backup if the sale of Hertz fails. The IPO option also improves the bargaining position of the seller during the negotiations of the sale of Hertz. You should expand on these points in the report and presentation.
Question 3: pages 6 to 8 of the case provide a useful outline of the operational and financial value-creating opportunities that the sponsors can exploit in this transaction. Interpret these opportunities in your own words. Question 4: information for this question starts on page 7. Interpret the financial synergies in your own words.
Question 5: there is little reason to believe that the projected growth rates are unreasonably high. In fact, the projections might even be a little too conservative. The estimates about the cost savings also seem conservative. However, it might be a good idea to discuss potential risks that could negatively affect future performance. Question 6: the instructions for answering these questions are contained in
Question 6 of the case study assignment and should be fairly explanatory. The net book value of the RAC fleet is calculated as the RAC fleet book value minus 13% x RAC fleet book value. You should try calculating the enterprise value of Hertz twice: once using the median EBITDA multiple and once using the mean EBITDA multiple.
Question 7: find the discount rate such that the present value of your answer in Question 6 equals $2.3 billion.
Question 8: calculate the present value of your answer in Question 6 using a 20% discount rate and