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Deloitte & Touche Corporate Finance LLC www.investmentbanking.deloitte.com

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Through its global member firms, Deloitte Touche Tohmatsu (“DTT”) is one of the world’s leading professional services organizations, a broad-based advisory firm offering an integrated approach to leading organizations around the world.
Deloitte Touche Tohmatsu
$20.0 billion global revenues in 2006
135,000 professionals in 140 countries
Deloitte & Touche USA LLP and its subsidiaries
Greater than $8.75 billion in revenues in 2006
37,000 professionals in 90 U.S. cities
Detroit, MI
1000+ employees
DTCF headquarters
All subsidiaries are represented
Deloitte & Touche LLP
• Audit
• Enterprise Risk
Services
• M&A Transaction
Services
Deloitte Consulting LLP
• Strategy and
Operations
• Human Capital
• Enterprise Applications
• M&A Integration
Deloitte Tax LLP
• Corporate Tax
• International Tax
• Private Client Advisory
• M&A Tax Services
Deloitte Financial
Advisory Services LLP
• Forensic & Dispute
• Corporate Finance
• Reorganization
• Valuation
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DTCF and the corporate finance practices of the member firms of DTT or their affiliates are able to work together to provide industry-specific experience and execution capabilities to assist in the completion of M&A advisory assignments around the globe.
Europe
• Amsterdam
• Barcelona
• Brussels
• Copenhagen
• Dublin
• Edinburgh
• Frankfurt
• Glasgow
• Helsinki
Canada &
United States
• Chicago
• Detroit
• Los Angeles
• Montreal
• New York
• Toronto
• Vancouver
• Calgary
• Edmonton
• Quebec
• SWO
Asia
• Beijing
• Mumbai
• Hong Kong
• Seoul
• Tokyo
• Lisbon
• London
• Madrid
• Milan
• Munich
• Oslo
• Paris
• Rome
• Stockholm
Latin & South
America
• Buenos Aires
• Mexico City
• Santiago
Africa
• Johannesburg
Australia &
New Zealand
• Adelaide
• Auckland
• Brisbane
• Melbourne
• Perth
• Sydney
* In all office locations outside the United States listed above, corporate finance services are offered by the DTT member fi rm of the applicable country or an affiliate thereof. DTCF works closely with these DTT member firms or their affiliates to give clients access to global investment banking coverage. Each of the DTT member firms is a separate and independent legal entity.
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Our broad offering of services and our experience allows us to provide our clients with an objective perspective on the complete range of shareholder alternatives.
Tax Services
(Deloitte & Touche Tax LLP)
(Deloitte Consulting LLP)
Sale and Divestiture
• Pre-sale due diligence
• Identify buyers
• Prepare confidential memorandum
• Clear the market
• Deal negotiation
• Coordinate closing
Acquisition, Joint
Venture and Alliance
• Define acquisition goals
• Target evaluation
• Transaction modeling
• Finance assistance
• Deal negotiation
• Coordinate closing
M&A Transaction Services
(Deloitte & Touche LLP)
(Deloitte Tax LLP)
Consulting and Post Merger Integration
Services
(Deloitte Consulting LLP)
DTCF
Investment Banking Services
Capital Raising
• Assess alternative structures
• Create a plan
• Identify appropriate sources
• Transaction modeling
• Deal negotiation
• Coordinate closing
Corporate
Development Advisory
• Prioritize shareholder objectives
• Enhance corporate finance capabilities
• Develop financial models and analyses
Valuation Services
(Deloitte Financial Advisory Services
LLP)
Investment banking products and services within the United States are offered exclusively through DTCF.
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DTCF together with the member firms of DTT and their affiliates, ranked No. 3 among firms providing investment banking services (in terms of number of deals closed) for the six months ended June 30, 2007, according to Thomson Financial.
Mid-Market Financial Advisor
KPMG Corporate Finance
Pricew aterhouseCoopers
Deloitte Touche Tohmatsu - Corporate Finance
Rothschild
Citi
Ernst & Young LLP
UBS
Nomura
IMAP
Lazard
Houlihan Lokey How ard & Zukin
Jefferies & Co Inc
Credit Suisse
JP Morgan
M&A International
Morgan Stanley
RBC Capital Markets
Merrill Lynch
ABN AMRO
Goldman Sachs & Co
Rank
13
14
15
16
17
18
19
20
9
10
11
12
7
8
5
6
3
4
1
2
No. of Deals
126
109
55
49
49
41
35
34
34
33
101
74
72
69
65
65
65
61
59
56
Deal Value ($mm)
2,642
3,142
3,927
2,149
663
2,488
1,857
2,866
1,116
2,256
2,383
3,427
4,455
1,792
4,854
2,889
468
2,668
2,090
2,705
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ThyssenKrupp Stahl Company a wholly owned subsidiary of
ThyssenKrupp Budd Company has been acquired by
Speyside Equity LLC
The undersigned acted as exclusive financial advisor to ThyssenKrupp Budd Company
Deloitte & Touche Corporate Finance LLC
7
Michigan Institute for
Radiation Oncology and
Michigan Comprehensive
Cancer Institute has been acquired by
The undersigned acted as exclusive financial advisor to MIRO/MCCI
Deloitte & Touche Corporate Finance LLC www.investmentbanking.deloitte.com
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Accounting
• Audit, Tax, F&DS, Government
(FBI/CIA), Financial Services
Finance
• Treasury, Consulting, Investment
Banking, Financial Services
Marketing
• Brand Management, Consulting,
Market Research, Financial Services
Supply Chain
• Engineering, Supply Chain
Management, Consulting,
Government
• Guides, websites, magazines, industry publications, alumni
Vault Career Library
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DTCF is a unique combination of a boutique investment bank with the resources, relationships and reputation of a large global firm
•DTCF is a leading middle market global investment bank
–Bankers see a variety of deals for highly recognizable clients
–Registered Broker Dealer
•DTCF has recruited top Wall Street talent
–Senior bankers come from leading bulge-bracket Wall Street firms
–Junior bankers recruited from top finance and business school programs
•Clients include small and mid-cap companies, as well as Fortune 500 firms
–Leads to well-rounded M&A and financing experience
–Greater ability to “step up” earlier in your career
DTCF is committed to diversity, personal development and work/life balance
•Senior bankers employ an “open door” policy at all times
•Team approach and feel create a positive working environment
–Small teams allow for greater responsibility and learning opportunities
•Early career focus on business development
–Extensive training available through
Deloitte
–C-Suite client contact expected at all levels
•Goal is to develop future senior bankers
–Analysts and Senior Associates are team members, not resources
–All bankers involved in group strategy
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Our Professionals are expected to: Requiring the Following Skills:
1. Serve middle to large public and private held businesses
1. Professional demeanor and outgoing personality
2. Create innovative solutions for clients
3. Act as the primary coordinator and facilitator with all parties related to a transaction
2. Excellent problem solving skills
3. Self-starters with solid team skills and a desire to contribute to a growing and dynamic practice
4. Analyze companies from a financial, operational and industry perspective
4. High performing business students with focus on finance & accounting
5. Interface with “C-suite” level management and business owners
5. Strong oral & written communication skills
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ABC Automotive Products has selected you to advise them on the sale of their company. As analysts you have been assigned to construct the valuation analysis that will be used in the coming days to evaluate several incoming offers. The analysis is critical for the client as they will be using as the bases for which offer they will accept.
Company Snapshot
ABC Automotive Products is a vertically integrated supplier controlling all aspects, and taking responsibility for, the design and manufacture of on-glass connection systems, including the soldering process on customer glass and the functionality in the vehicle or component assembly.
ABC is expecting to see strong supporting analysis of how you arrived at the valuation. You must provide a supporting financial model to reflect the range of value that you arrive at.
Using the attached information which includes a company snapshot, DCF analysis, public comps, and comparable transactions to determine a range of value for ABC Automotive Products.
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Valuation Methodologies:
Valuation Methodologies and Related Considerations
Comparable Company
Analysis
Comparable
Transaction Analysis
Discounted Cash
Flows Analysis
• Value based on comparisons with
“similar” publicly traded companies
• Comparable publicly traded companies similar in business, financial structure, growth prospects, financial performance, and size
• Valuation benchmarks include multiples of:
- Revenue
• Value based on comparisons with
“similar” acquisition transactions
• Comparable acquisitions similar in business, industry, and financial structure
• Value includes control premium
• Valuation benchmarks include multiples of:
- Revenue
Leveraged Buyout
Analysis
• Value based on potential purchase price in a leveraged buyout transaction
• Value constrained by credit markets, debt capacity, and equity investor return expectation
- EBITDA
- EBITDA
• Value based on the present value of future free cash flows
• Free cash flow is defined as unlevered net income plus noncash adjustments, less changes in working capital and capital expenditures
• Discount rate as determined by the weighted average cost of capital and financial risk
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Assumptions:
EBIT Margin
Taxes
Depreciation (% of sales)
25%
40%
2% r e r d
= 18%
= 10%
Calculations:
Change in NWC = Current Year NWC - Previous Year NWC
Discount Factor = (1/(1+r)^n)
Terminal Value = 2012 FCF * (1+Terminal Growth Rate)/(r-g)
Net Working Capital (% of sales)
Capital Expenditures (% of sales)
Terminal Growth Rate (Free Cash Flow)
WACC (r)
($ in MM)
Sales
NWC - Ending
EBIT (25% of sales)
Less: Taxes (40%)
Add: Depreciation (2% of sales)
Add: (Increase)/Decrease in NWC
Less: CapEx (5%)
FCF
Years Out (n)
Discount Factor (1/(1+r)^n)
PV (FCF x Discount Factor)
NPV
2006
185
19
46
-19
4
2007
213
21
53
-21
4
-3
-11
23
0.5
0.935
21
2008
245
24
1.5
0.817
2009
281
28
2.5
0.714
2010
324
32
3.5
0.624
2011
372
37
4.5
0.546
10%
5%
3%
14%
2012
428
43
Terminal
Value
5.5
0.477
5.5
0.477
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Company Name
Johnson Controls Inc.
Magna International, Inc.
Denso Corp.
Siemens AG
Valeo SA
Aisin Seiki Co. Ltd.
Sumitomo Electric Industries Ltd.
PPG Industries Inc.
Average
Share
Price
78.12
40.04
109.51
45.54
32.51
15.29
66.29
Market
Cap
8,572
33,085
97,647
3,490
9,342
11,597
10,955
Net
Debt
(663)
(797)
6,046
1,339
(123)
2,878
997
Enterprise
Value
7,909
32,287
103,692
4,829
9,218
14,476
11,952
EV/
Sales
.8X
2.2X
2.4X
2.2X
2.3X
2.6X
1.8X
1.3X
EV/
EBITDA
4.3X
8.9X
9.2X
6.5X
7.3X
9.3X
8.1X
6.7X
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Date
Announced
12/18/06
11/29/06
11/03/06
08/31/06
05/23/06
02/01/06
12/19/05
06/06/05
12/13/04
10/25/04
07/07/04
05/12/04
Acquiror
Kimball Electronics Group
Nidec Corp
Sensata Technologies Inc.
Weichai Power Co Ltd
Assa Abloy AB
Emerson Electric Co.
Honeywell International Inc
INSSEC
Honeywell International Inc
Magna International Inc
Emerson Electric Co.
Mitsuba Corp
Target
Reptron Electronics Inc
Brilliant Manufacturing Ltd
First Technology Automotive and
Special Products
Torch Automobile Group Co Ltd
Fargo Electronics Inc
Artesyn Technologies Inc.
First Technology PLC
Cie Automotive SA
Novar PLC
Tesma International Inc
Marconi Corporation PLC,
Outside Plant and Power
Enterprise
Value ($mm)
$ 49.7
134.6
914.9
300.0
686.9
669.9
2,294.6
947.1
254.7
559.5
406.0
90.0
Average
10.2 x
1.6 x
1.1 x
3.0 x
2.7 x
2.0 x
2.2 x
Enterprise Value
Sales
2.7 x
EBITDA
9.4 x
1.8 x
2.6 x
9.3 x
1.7 x
5.2 x
10.6 x
28.3 x
8.5 x
33.1 x
7.7 x
4.6 x
9.7 x
11.1 x n/a n/a
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Multiple
Value
2006 Sales
2006 EBITDA
Public Comps
Sales EBITDA
DCF
Value
Range of Value:
Min
Max
Average
Transaction Comps
Sales EBITDA
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Assumptions:
EBIT Margin
Taxes
Depreciation (% of sales) r e
= 18%
25%
40%
2% r d
= 10%
Calculations:
Change in NWC = Current Year NWC - Previous Year NWC
Discount Factor = (1/(1+r)^n)
Net Working Capital (% of sales)
Capital Expenditures (% of sales)
Terminal Growth Rate (of Free Cash Flow)
WACC (r)
Terminal Value = 2012 FCF * (1+Terminal Growth Rate)/(r-g)
($ in MM)
Sales
NWC - Ending
EBIT (25% of sales)
Less: Taxes (40%)
Add: Depreciation (2% of sales)
Add: (Increase)/Decrease in NWC
Less: CapEx (5%)
FCF
Years Out (n)
Discount Factor (1/(1+r)^n)
PV (FCF x Discount Factor)
NPV
2006
185
19
46
-19
4
2007
213
21
53
-21
4
-3
-11
23
0.5
0.935
21
$ 327
2008
245
24
26
1.5
0.817
21
61
-24
5
-3
-12
2009
281
28
70
-28
6
-4
-14
30
2.5
0.714
21
2010
324
32
35
3.5
0.624
22
81
-32
6
-4
-16
2011
372
37
93
-37
7
-5
-19
40
4.5
0.546
22
10%
5%
3%
14%
2012
428
43
107
-43
9
-6
-21
46
5.5
0.477
22
Terminal
Value
414
5.5
0.477
197
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Company Name
Johnson Controls Inc.
Magna International, Inc.
Denso Corp.
Siemens AG
Valeo SA
Aisin Seiki Co. Ltd.
Sumitomo Electric Industries Ltd.
PPG Industries Inc.
Average
Share
Price
78.12
40.04
109.51
45.54
32.51
15.29
66.29
Market
Cap
8,572
33,085
97,647
3,490
9,342
11,597
10,955
Net
Debt
(663)
(797)
6,046
1,339
(123)
2,878
997
Enterprise
Value
7,909
32,287
103,692
4,829
9,218
14,476
11,952
EV/
Sales
.8X
2.2X
2.4X
2.2X
2.3X
2.6X
1.8X
1.3X
1.9X
EV/
EBITDA
4.3X
8.9X
9.2X
6.5X
7.3X
9.3X
8.1X
6.7X
7.5X
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Date
Announced
12/18/06
11/29/06
11/03/06
08/31/06
05/23/06
02/01/06
12/19/05
06/06/05
12/13/04
10/25/04
07/07/04
05/12/04
Acquiror
Kimball Electronics Group
Nidec Corp
Sensata Technologies Inc.
Weichai Power Co Ltd
Assa Abloy AB
Emerson Electric Co.
Honeywell International Inc
INSSEC
Honeywell International Inc
Magna International Inc
Emerson Electric Co.
Mitsuba Corp
Target
Reptron Electronics Inc
Brilliant Manufacturing Ltd
First Technology Automotive and
Special Products
Torch Automobile Group Co Ltd
Fargo Electronics Inc
Artesyn Technologies Inc.
First Technology PLC
Cie Automotive SA
Novar PLC
Tesma International Inc
Marconi Corporation PLC,
Outside Plant and Power
Averages
Enterprise
Value ($mm)
$ 49.7
134.6
914.9
300.0
686.9
669.9
2,294.6
947.1
254.7
559.5
406.0
90.0
$365
Enterprise Value
Sales
2.7 x
EBITDA
9.4 x
1.8 x
2.6 x
9.3 x
1.7 x
10.2 x
1.6 x
1.1 x
5.2 x
10.6 x
28.3 x
8.5 x
33.1 x
7.7 x
4.6 x
3.0 x
2.7 x
2.0 x
2.2 x
9.7 x
11.1 x n/a n/a
2.1 x 8.3 x
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2006 Sales
2006 EBITDA
$ 185
$ 50
Multiple
Value
Sales EBITDA
1.9
7.5
$ 359.59
$ 377.41
Sales EBITDA
2.1
8.3
$ 395.90
$ 417.44
Value
$ 327
Range of Value:
Min
Max
Average
$ 327
$ 417.44
$ 375.40
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About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 140 countries. With access to the deep intellectual capital of approximately 150,000 people worldwide, Deloitte delivers services in four professional areas — audit, tax, consulting, and financial advisory services — and serves more than 80 percent of the world ’ s largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global companies. Services are not provided by the Deloitte
Touche Tohmatsu Verein, and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas.
As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other ’ s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names “ Deloitte, ” “ Deloitte & Touche, ” “ Deloitte Touche Tohmatsu, ” or other related names.
In the United States, Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu and services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP,
Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte & Touche USA LLP. The subsidiaries of the U.S. member firm are among the nation ’ s leading professional services firms, providing audit, tax, consulting, and financial advisory services through nearly 40,000 people in more than 90 cities. Known as employers of choice for innovative human resources programs, they are dedicated to helping their clients and their people excel. For more information, please visit the U.S. member firm ’ s Web site at www.deloitte.com
Deloitte & Touche Corporate Finance LLC ( “ DTCF ” ), member FINRA, is a wholly-owned subsidiary of Deloitte Financial Advisory Services LLP. Investment banking products and services within the United States are offered exclusively through DTCF.
Copyright © 2007 Deloitte Development LLC. All rights reserved.
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