MillerCoors, a US joint venture between Molson Coors and SABMiller, requested second-year Nicholas Center students to develop a dynamic valuation model that it could use to guide decision-making. The joint venture, which was announced six years ago, asked the Nicholas Center team to evaluate the JV from an outsider’s perspective, so the team set about gathering publically available information to start.
The team gathered information according to the different US beer segments, both on an industry-wide basis as well as a JV-specific basis. Aggregating and analyzing the data proved a challenging but ultimately rewarding exercise that provided useful inputs for the team’s discounted cash flow model. To ensure maximum utility for the model, the team built it such that all the key assumptions for each beer segment – pricing, volume, and margins – could be toggled. MillerCoors will then be able to analyze the impact of changes in any or all of these key assumptions, providing them with a flexible decision-making aid.
Wanting to confirm the valuation model, the team also gathered and evaluated comparable transactions and public comparable companies. These additional data points reinforced their existing valuation model, validating their previous findings.
The students learned valuable lessons on how to find, synthesize, and report out relevant information in an efficient fashion while MillerCoors will receive a model they can employ to guide crucial decisions in the years to come.