1 Analyze the recent financial performance of S&G. How much internal (organic) growth would S&G be able to fund? Is this enough to achieve their forecasted growth?
2 What could be the sources of external capital to finance S&G targeted growth? Why do they want to go public? Why increasing leverage is not considered?
3 Analyze S&G’s “No Win-No Fee” business model. How much is a successful personal injury lawsuit worth? What is the expected value of a new case? What is the break-even winning probability? (Hint: Use the financial model provided with the case)
4 What could happen to the expected value of a new case if the firm gets bigger?
5 How many cases did S&G work on in 2006? With a WACC of 11%, what is the capitalized value of the ongoing cases? What fraction of S&G’s market capitalization (assuming $1 per share) does this represent?
6 How much is S&G worth as a company? (Hint: Use WACC=11%)
7 Should Rosen invest in the S&G IPO?