Case ID: 206027     Solution ID: 1938     Words: 2224 Price $ 75

Spyder Active Sports 2004 Case Solution

Case Solution

To increase their efficiency, color cases should be issued in color. David Jacobs established a top of the line ski clothing organization in 1978. He effectively manufactured and developed the organization, building up a noteworthy global brand that attracted ski racers and other dynamic and athletic skiers. In 1995, he looked for non-internal, outer funding to back the organization’s growth and development and constructed a pecuniary partnership with CHB Capital Partners, a private equity company in Denver. By 2004, Jacobs was prepared to contemplate different sorts of equity trades that would offer a foundation of liquidity to him and his kin. This would also entail the selling of Spyder to another apparel organization and sale of a vast unit of stock to a private equity company. Presents matters of valuation of an exclusive and privately run company and gives way to different means to glean profits from a private company. Additionally raises family business issues on the grounds that the exchange would have a huge influence on two of his children who play an active role in the business. Includes colored exhibits.

Excel Calculations

Discount Rate:Calculating the Unlevered Beta for Spyder Using Competitors

Calculating the Equity Discount Rate for Spyder

DCF Valuation:Forecasted Cash Flows* of SpyderValuation of Spyder under Various Forecasting Scenarios

Multiples Valuation:Excerpt from Spyder Income Statement

Multiples Based on Past Transactions, Multiples Based on Comparable Companies

Analysis of Value:Net Value Range Using DCF

Net Value Using Multiples, Footbal Field Valuation Data (in millions of dollars), DCF Valuation, DCF less Minority Discount, Sales Multiple, EBITDA Multiple

Questions Covered

Identify the different exit options that are feasible for Spyder in 2004, and analyze the benefits and costs of each alternative. Is this a good time to sellthe business? Consider the interests and needs of the owner(s), the current state and future prospects of the company, and the current state of the financial markets.

How, if at all, does the value of Spyder depend upon its ownership structure? What are the (other) primary determinants of value?

Prepare estimates of value based on a Discounted Cash Flow (DCF) analysis and the Comps – both the trading and merger and acquisition transaction multiples presented in the case. How well do these estimates reflect the considerations you believe to be most pertinent? In your valuation analysis you should consider control premiums and/or minority discount (selling controlling stake vs. minority interest), the company’s potential lack of marketability and accounting for synergies (strategic vs. financial buyer). Please footnote, justify and explain your assumptions. Prepare a valuation “football field” chart/diagram that summarizes your valuation summary. 

Compare the alternative transactions described on the last page of the case. Which one would you choose if you were David Jacobs? Which one would you choose if you were a general partner in CHB Capital Partners? Who else is affected by this choice and how?