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Case Study - American Greetings By —Jeff Stein

Case Study Questions:

1. Define and discuss the following business valuation process:

a. Basic Framework

b. Book Value Approach

c. Market Value of Traded Securities Approach

d. Market Multiple Approach

e. Discounted Cash Flow Approach

2. Expand upon the Discounted Cash Flow Approach:

a. Define and discuss how to develop the Free Cash Flow forecast

b. Define and discuss how to develop the Terminal Value

c. Define and discuss how to develop the Discount Rate

3. Discuss how valuation methods must be adjusted for early stage companies.

4. Discuss how valuation methods must be adjusted for late stage companies.

5. At the end of 2011 American Greetings was trading at an EBITDA multiple of 3.5.

a. Do you think a 3.5-times multiple is appropriate for American Greetings?

b. What is the implied share price that corresponds to a 3.5-times EBITDA multiple?

6. Develop a pro forma modified cash flow analysis for American Greetings for fiscal years 2012 through 2015 based on the two sets of ratios in case Exhibit 8.

7. Based on the discounted cash flows associated with the fiscal years 2012 through 2015forecast developed for Question 7; what is:

a. The implied enterprise value of American Greetings

b. The corresponding share price?

Operation Management, Management Studies

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