The intent of this analysis is to find if Goldengate Capital should take part in a $ 4. 5 million direction acquisition of Calaveras Vineyards. Located in Alameda Valley. California. Calaveras Vineyards sits on 220 estates. dwelling of 175 estates of vineries. and 45 estates of equipment sheds. a wine maker edifice. and a little farmhouse with guestrooms. offices. and gross revenues room.

Strategic Analysis
SWOT Analysis
Fiscal Analysis
Current direction of Calaveras. Stout PLC. prepared pro forma fiscal statements for financial old ages stoping 1990. 1991. 1992. and 1993. This information is being used to analyze historical informations and expression for relevant forms in order to farther valuate Calaveras Vineyards.

Gross saless increased from $ 2. 4 million in 1990 to $ 2. 8 million in 1991. In 1992 Calaveras started to bring forth premium vinos with increasing mean industry monetary values. Although gross revenues decreased from 1992 to 1993. hard currency flow improved vastly. Increasing the mean monetary value. and presenting premium vinos. allowed Calaveras to derive a higher net income border. Based on the pro forma historical fiscal statements. a comparative analysis has been completed to place Calaveras’ place among other makers of vino and brandy.

Calaveras. when compared to other makers industry-wide. may hold non hold the capableness to pay its duties. The current ratio of 0. 4 is less than 1. 0. bespeaking that Calaveras does non hold adequate current assets to cover their liabilities. to include equity. Although the current ratio is low. this does non intend there is a critical job. Management should be cognizant and address rapidly to find what action to take.

The assets to gross revenues ratio indicates that Calaveras slightly efficient in pull offing its assets in the relation the gross generated. The higher the figure the less investing is needed in order to bring forth gross. Calaveras falls someplace in between the upper and average quartile. They will necessitate to put in order to bring forth more gross.

Calaveras’ is bring forthing a 10 % return on gross revenues. above the upper quartile of industry norms. This means the vinery is turning more efficient and supplying turning net incomes. The return on assets ratio falls between the upper quartile and average quartile of the industry norm. and illustrates how well direction is using the company’s assets. With rate of 4. 2 % Calaveras is making better than some of their rivals using assets. but may necessitate to put to give a higher rate. which will pull possible spouses and loaners.

Projections
Forecast premises were used to project hard currency flow in the following 5 old ages. All premises are have been analyzed for rationality and work to bring forth a forecasted Income statement and balance sheet. A growing rate of 2 % may non be sustainable. but it is conservative and will be used in dismissing hard currency flows. Depending on how Calaveras will use free hard currency flows. capital outgos may increase. ensuing in a lessening in hard currency flows. However. these outgos should give a higher return on gross revenues. and increase hard currency flows.

Evaluation

Based on the forecasted income statement and balance sheet a discounted hard currency flow is calculated. utilizing the leaden mean cost of capital to dismiss hard currency flows.