Financial Synergy Valuation Template (Beta Method)

Table of Contents
Synergy Valuation Worksheet

Notes
This Excel model is for educational purposes only and should not be used for any other reason.
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Financial Synergy Valuation Company A Company B

Inputs
Risk-Free Rate 2.376%
Risk Premium 3.510%

Beta 0.98 1.50

Pre-tax Cost of Debt 5.6% 4.0%

Tax rate 30.0% 35.0%
Debt/Capital ratio 27.7% 10.0%

Revenues 800.3 200.0

EBIT 86.6 40.0

Pre-tax return on capital 8.3% 5.0%

Reinvestment Rate 75.0% 75.0%
Length of growth period 5 5

Output
Cost of Equity 5.8% 7.6%
After-tax cost of debt 3.9% 2.6%
Cost of capital 5.3% 7.1%

After-tax return on capital 5.8% 3.3%

Reinvestment rate 75.0% 75.0%
Expected growth rate 4.4% 2.4%

Value of firm
PV of FCFF in high growth 74 28
Terminal value 1,451 421
Enterprise value 1,195 326

Value of Synergies
Value of firms (standalone)
Value of firms (combined)
Value of synergy
 5
Combined

1.10

5.3%
31.1%
23.9%

1,000.3
126.6

7.6%
75.0%
5

6.3%
3.6%
5.6%

5.2%
75.0%
3.9%

104
1,881
1,534

1,521.1
1,534.5
13.4