The two solutions I have found both seem to be insufficient. The first is to add the synergy into the denominator of EV/EBITDA but this decreases the valuation multiple which doesn't make sense to me. The second is to value the companies individually, then combined, then combined with the synergy; obviously I don't have the data to do this.
Also, the target has informed us they have spoke with capital providers who have indicated they could refinance their existing debt at a pre-tax rate of 12%. I only have the information on the balance sheet that discusses current and long term liabilities. The income statement also has the net interest expense on it. I'm trying to figure out how to use this information to increase the valuation but with this limited amount of information it doesn't seem possible. I don't know the current interest rate, just that if they're refinancing to 12% it's gotta be higher than that. Then again I don't see why they'd give this to me if it's useless. Any ideas?
This is an example from a few years ago that we're just doing a dry run on to iron out the kinks and answer any questions we think of.