Series 79: Valuation

Valuation

The comparable companies analysis produces a valuation range of $121 to $187 million, with a median valuation of $154 million. The first step in calculating the value range is to find a median around which to center that range. Since the median EV/LTM revenue value for these companies was 1.4x and we were instructed to develop our range within 20% of that median, that range is 1.1x to 1.7x (1.4 x 0.20 = 0.28, which is rounded up to 0.3). We then respectively subtract and add that value to the median to derive the range endpoints. With the range endpoints now established, we multiply Analysis Solutions’ LTM revenue of $110 million by each of those points (1.1 x 110 = 121; 1.7 x 110 = 187), giving us a range of $121 to $187 million. The median enterprise value is computed by multiplying the median multiple for the EV/LTM revenue of the comparable companies by the LTM revenue for Analysis Solutions (1.4 x 110 = 154), giving us an enterprise value of $154 million.

The precedent transactions analysis produces a valuation range of $150 to $175 million, with a median valuation of $162.5 million. Our first step, once again, is to find a median around which to base our valuation range. The median EV/LTM EBITDA for these precedent transactions is 6.5x. Setting the valuation range at 1.0x around the median, as we were instructed, gives us a range of 6.0x to 7.0x. We then multiply each of those range endpoints by Analysis Solutions’ LTM EBITDA of $25 million (6.0 x 25 = 150; 7.0 x 25 = 175), giving us a range of $150 to $175 million. The median enterprise value is computed by simply multiplying the median multiple for the EV/LTM EBITDA of the comparable companies by the LTM EBITDA for Analysis Solutions (6.5 x 25), giving us an enterprise value of $162.5 million.

The discounted cash flow analysis produces a valuation of $166.4 million and the sensitivity analysis range is $144.6 to $196.7 mil