The VCM Co

Subject:AccountingPrice: Bought3

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• The VCM Co. is a company that manufactures processors and micro chips used in creating cellphones and laptops. 
• The VCM Co. was founded in 2017 and the co-founders sold 20% stake in 2019 for ?3.0Million when the company's sales revenue is ?5.0million.  
• The VCM Co.'s Sales Revenue for the past twelve months (annual) stands at ?30million with a gross profit ratio of 45%. VCM's annual operating expenses amounted to ?8.0million excluding the depreciation, amortization, interest and taxes.  
   
• VCM Co.'s net income is ?3.5million. 
   
• There are three comparable companies that are offered publicly. Their P/E ratio are at ?20, 18, and 22. They all represent less than 25% of the total share capital of each company. 
   
• There are three transactions that resemble closely the one under observation: 
   

 

1. Annual Sales of ?50.0million, EV/Net Income of 15 and EV/EBITDA of 18, the transaction represents 70% stake 
2. Annual Sales of ?35.0million, EV/Net Income of 11 and EV/EBITDA of 14, the transaction represents 45% stake 
3. Annual Sales of ?15.0million, EV/Net Income of 18 and EV/EBITDA of 15, the transaction represents 50%