Wang and Associates has been engaged to prepare a report to the spe...

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Wang and Associates has been engaged to prepare a report to the special committee of ABC limited that addresses the following matters pertaining to the Agri-Panel acquisition:

1. Make a recommendation on which sources of financing should be used and in what proportions.
2. Discuss how the deal could be structured.
3. Prepare a list of the financial due diligence procedures we should perform in contemplation of either the acquisition of assets or shares.
4. Identify and discuss the valuation approach for the major components of the purchase price allocation.
5. Determine whether this investment meets ABC limited’s return expectations. Attached is the information related to this opportunity. Your report should be no longer than 4 pages, excluding any supporting Excel appendices.
- Letter of intent
- Agri-Panel financial information
- Sources of potential financing

Please note that the target return for this investment is a 24% internal rate of return on the equity investment. I think you should consider using a five-year time horizon and assume the shareholders are able to sell the company for the same implied EBITDA multiple as they originally purchased it.

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We have analyzed different matters pertaining to ABC Limited’s acquisition of Agri-Panel as requested, and the purpose of this report is to present our findings to you. The report addresses five key areas as outlined below:
1. Recommendation on sources of financing that should be used
The recommended sources of finance that should be used to fund the acquisition of Agri-Panel are Plaster Rock Private Equity Fund, MNB’s line of credit and term loan, and Hudson Bay Teachers Union Pension Fund in that order. At 16% interest, Hudson Bay Teachers Union Pension Fund proposal is the most expensive financing option so it should only be used as a last resort. Plaster Rock Private Equity Fund is the most attractive financing option because it can provide about...

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