Beauty and Braun Death Match

PrecisionFast Ltd: The Manufacturing Multiplier

Multiple Choice Questions

Question 1: What was PrecisionFast Ltd’s initial valuation problem despite generating $2.2 million in EBITDA? A. The company had outdated manufacturing equipment B. The business was valued at only 3x EBITDA due to structural risk factors C. John’s cousin was handling the bookkeeping D. The aerospace industry was in decline

Question 2: What percentage of PrecisionFast’s revenue came from their top two clients initially? A. 40% B. 50% C. 60% D. 80%

Question 3: What was the most critical validation that PrecisionFast’s transformation was successful? A. Revenue increased by 50% B. The GM handled a major client issue independently without John’s involvement C. The company hired 20 new employees D. They won a manufacturing excellence award

Question 4: How much did PrecisionFast’s transformation cost over 18 months? A. $50,000 B. $180,000 C. $350,000 D. $500,000

Question 5: What was PrecisionFast’s final valuation after the transformation? A. $9.2 million B. $11.5 million C. $13.8 million D. $16.3 million

Explanation Questions

Question 6: Explain why customer concentration was considered a “bomb” risk for PrecisionFast. How did this specific risk factor impact the company’s valuation multiple, and what would have happened if either major client left?

Question 7: The broker said PrecisionFast was “John with a building full of machines, not a business that runs without John.” Analyze this statement by identifying three specific examples of owner dependency from the case study and explaining how each one contributed to the low 3x multiple.

Question 8: Calculate and explain PrecisionFast’s return on investment (ROI) from the transformation. Show your work using the investment cost ($180,000) and value created ($7.2 million), then explain why this ROI is significant compared to traditional revenue growth strategies.

Question 9: Compare PrecisionFast’s revenue and EBITDA at the beginning versus the end of the transformation. What does this comparison reveal about the relationship between earnings growth and enterprise value creation? Use specific numbers from the case study.

Question 10: John implemented four systematic changes during his transformation. Choose two of these changes and explain: (a) what specific risk factor each addressed, (b) how the implementation worked in practice, and (c) why buyers would value this change when determining the valuation multiple.

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