Step 1: Income Statement Projections

A
2019 2020 2021 2022 2023 2024 2025
Revenue
Cloud Revenue
Price 16 16 16 16 16 16 16
Units 1500 1575 1654 1736 1823 1914 2010
Revenue 24000 25200 26460 27783 29172 30631 32162
% Growth - 5% 5% 5% 5% 5% 5%
Time Revenue
Price 36 36 36 36 36 36 36
Units 3000 3150 3308 3473 3647 3829 4020
Revenue 108000 113400 119070 125024 131275 137838 144730
% Growth - 5% 5% 5% 5% 5% 5%
Licensing
Total Units Sold (PY) - 4500 4725 4961 5209 5470 5743
Per Unit Fee 5 5 5 5 5 5 5
Retention Units(25%) 1125 1181 1240 1302 1367 1436
Licensing Revenue - 5625 5906 6202 6512 6837 7179
% Growth - - 5% 5% 5% 5% 5%
Total Revenue (₹) 132000 144225 151436 159008 166958 175306 184072

B
COGS
Total Units Sold 4500 4725 4961 5209 5470 5743 6030
Packaging Cost PU 1.5 1.5 1.5 1.5 1.5 1.5 1.5
Total Packaging Cost 6750 7088 7442 7814 8205 8615 9046
Royalty Cost PU 3 3 3 3 3 3 3
Total Royalties to PH 13500 14175 14884 15628 16409 17230 18091
Mktg Expns PU 3 3 3 3 3 3 3
Mktg Cost 13500 14175 14884 15628 16409 17230 18091
Fulfillment Costs 4 4 4 4 4 4 4
Fulfillment Costs 18000 18900 19845 20837 21879 22973 24122
Total Revenue (ER) 132000 138600 145530 152807 160447 168469 176893
Smartphone Company 15% 15% 15% 15% 15% 15% 15%
Total SCF 19800 20790 21830 22921 24067 25270 26534
Total Revenue (IR) 132000 144225 151436 159008 166958 175306 184072
Bad Debt 15% 15% 15% 15% 15% 15% 15%
Total Bad Debt 19800 21634 22715 23851 25044 26296 27611
Total COGS 91350 96761 101599 106679 112013 117614 123495

C
G&A
Rent & Warehouse 350 350 350 350 350 350 350
LF 1500 1500 1500 1500 1500 1500 1500
Salaries & Benefits 1750 1750 1750 1750 1750 1750 1750
Total Revenue 132000 144225 151436 159008 166958 175306 184072
Sales Commission % 5% 5% 5% 5% 5% 5% 5%
Total Sales Bonuses 6600 7211 7572 7950 8348 8765 9204
Office & Maintenance 750 750 750 750 750 750 750
CEO Salary 1250 1250 1250 1250 1250 1250 1250
Total Revenue 132000 144225 151436 159008 166958 175306 184072
CEO Bonuses % 3% 3% 3% 3% 3% 3% 3%
Total CEO Bonuses 3960 4327 4543 4770 5009 5259 5522
Total G&A Costs 16160 17138 17715 18321 18957 19625 20326

D
Summary
Revenue 132000 144225 151436 159008 166958 175306 184072
% Growth - 9.3% 5.0% 5.0% 5.0% 5.0% 5.0%
Less: COGS 91350 96761 101599 106679 112013 117614 123495
GP 40650 47464 49837 52329 54945 57692 60577
% Margin 30.80% 32.90% 32.90% 32.90% 32.90% 32.90% 32.90%
Less: G&A 16160 17138 17715 18321 18957 19625 20326
EBITDA 24490 30326 32122 34008 35989 38068 40251
% Margin 18.6% 21.0% 21.2% 21.4% 21.6% 21.7% 21.9%
Step 2: Transaction Summary
Valuation ₹
2020 EBITDA 30326
Mutiple 5
Transaction Value 151629
Less: Debt -
Less: Others -
Offer Value 151629

Other Assumptions ₹
Resolver EBITDA Multiple 3
Revolver Availability 90977
Minimum Cash 5000
M&A Fees 1500
Existing Management Ownership 10%
Management Rollover (pre-tax) 50%

Sources and Uses

Sources ₹ % x Term Synd. Fee% Fees
BS Cash
Credit Facility 60652 38.1% 2 5 1% 607
Sub. Debt 45489 28.6% 1.5 5 1% 455
Mgmt. Rollover 7581 4.8% 0.25 1061
Cash Equity 45469 28.6% 1.5
Total Sources 159190 100.0% 5.25
Uses
Purch. Of Equity 144047 90.5%
Mgmt. Rollover 7581 4.8%
Minimum Cash 5000 3.1% Given
Trans. Expenses 1500 0.9% Given
Fin. Expenses 1061 0.7%
Total Uses 159190 100.0%

Purchase Accounting (Goodwill Calculation) (₹)

Purchase of Equity 151629
Less: Book Value of Equity 18838 Given
New Goodwill 132791
 Step 2: Pro Forma Balance Sheet
Balance Sheet Transactio 2020 PF
Cash - 5000 5000
AR (Accounts Receivables) 9816 9816
Inventory 10268 10268
Other Current Assets 2279 2279
PP&E 6500 6500
Goodwill 602 132791 132791
Def. Financing Fees - 1061 1061
Other Non-Current Assets 2587 2587
Total Assets 32052 170302

AP (Accounts Payables) 7550 7550

Other Current Liabilities 3793 3793
New Credit Facility - 60652 60652
New Subordianted Debt - 45489 45489
Other Non-Current Liabilities 1871 1269
Equity 18838 51550
Total Liabilities & Equity 32052 170302
 Step 4: Depreciation Schedule
Depreciation Schedule Fiscal Year Ending
2020 2021 2022 2023 2024 2025
Life 5
Existing PP&E Depreciation 1000 1000 1000 1000 1000 1000
New Depreciation 300 300 300 300 300
300 300 300 300
300 300 300
300 300
300
Total Depreciation 1000 1300 1600 1900 2200 2500