Fin 615
Entrepreneurial Finance
Anasazi Products Case Analysis Assignment
 
Instructions
 

  • Read through the Anasazi case to familiarize yourself with the details of the scenario
  • Conduct a valuation of the company and estimate the percentage of shares that the owners would need to offer venture capital investors in exchange for an investment of $1,700,000. Use the net cash flow forecasts provided in the case material and the following assumptions in your analysis:
    • Discounted cash flow valuation
      • Weighted average cost of capital of 11.50%
      • Horizon growth rate of 4.0%
      • Probability of success: 65%
    • Venture capital model valuation
      • EBITDA multiple of 7.0
      • Venture capital required rate of return of 50%
      • Liquidity discount of 30%
    • Check your answer against the video and written solution provided.
    • Submit spreadsheet for quiz points.

 
Assignment
 
You have been hired as a consultant to advise Anasazi’s board on how to handle discussions with investors over the next round of financing.  They have asked you to conduct a valuation of the firm and provide an opinion of the value of the firm and how much equity they should offer outside investors in exchange for the infusion of $1.7 MM of new capital.  They would also like your opinions on how to address investor concerns regarding the prospects for the company’s success in the future.
 
Format: Use standard business memo format; single spacing; extra space between paragraphs; indent first line of each paragraph; 12 pt. font, Times New Roman or Cambria style; left justify: do not center text;  limit your memo to five paragraphs of appropriate length (should be no longer than 1 ½ pages in length, exclusive of the memo heading).