Surya Tutoring
It is your job to evaluate the private equity o offers made for Surya Tutoring. In your write-up, you should brie y describe Surya Tutoring’s business and the business opportunity the extra financing will help it pursue, then provide an answer on which private equity offer you believe Surya should accept. Your write-up should include the following:
A valuation of Surya based on the financial projection in Exhibit 1. Assume free cash flows will grow at a 4% rate after 2014. Also, assume a beta of 1.70, use the 10year Treasury Bond (see Exhibit 5) for the risk-free rate, and assume the market risk premium in India is 8.50%.
A summary of the two offers: what are the implied valuations of Surya, how much ownership will Sharma retain, and what will Sharma’s stake be worth?
A discussion of other aspects important to the deal aside from the valuation itself that may in influence Sharma’s decision.
Feel free to make any reasonable assumptions necessary to answer the problem, although be sure to provide a good reason for each assumption.
It is your job to evaluate the private equity o offers made for Surya Tutoring. In your write-up, you should brie y describe Surya Tutoring’s business and the business opportunity the extra financing will help it pursue, then provide an answer on which private equity offer you believe Surya should accept. Your write-up should include the following:
A valuation of Surya based on the financial projection in Exhibit 1. Assume free cash flows will grow at a 4% rate after 2014. Also, assume a beta of 1.70, use the 10year Treasury bond (see Exhibit 5) for the risk-free rate, and assume the market risk premium in India is 8.50%.
A summary of the two offers: what are the implied valuations of Surya, how much ownership will Sharma retain, and what will Sharma’s stake be worth?