Location: Miami, FL
Action Helicopters is a company based out of Miami, FL which gives site-seeing rides for tourists and transportation for business personnel. The business is currently for sale and the asking price is set at $500,000.
We built an Excel spreadsheet to analyze the company’s operations and other relevant aspects in order to determine the accuracy of the current asking price. The spreadsheet is attached and contains a pro forma income statement through the year 2024, balance sheet, and statement of Free Cash Flows. Our model was built based on research and assumptions from the respective location and industry of Action Helicopters. We researched data such as the beta from similar companies and levered it according to our projected equity ratio.
In the analysis, we included an option of buying additional helicopters in years five and eight if the market proves to be favorable. To price this option, we used the Black-Scholes model. Our first input was calculated by changing the number of helicopters purchased and looking at the difference in free cash flows. We concluded the free cash flows generated by having this option would be $303,797. The model is structured so that it can be adjusted according to change in demand and costs.