Corporate Valuation (BUFN 630)

Professor Yang

Spyder Active Sports

Case Questions

This case provides an opportunity to value a private company on sale facing many
options. Assume that CHB has decided to sell its share (37.9%). Your task is to provide
valuations for different alternatives and help David Jacobs determine what he should do
with his shares. The following questions should guide your thinking as you conduct
valuation and provide the basis of your presentation.

1. How would David Jacobs’ decision affect the total percentage of shares for sale?
Would it affect the valuation? Why or why not?

2. The potential buyer can be publicly-traded or privately-held, and it can come from the
same industry (i.e., strategic buyer) or be a financial institution (i.e., financial buyer).
Would the valuation of Spider change depending on buyer type? Why or why not?
Explain qualitatively.

3. Estimate the value of Spyder using DCF based on forecasts provided by the case.
How would your valuation change, depending on the type of buyer (public or private,
strategic or financial)?

4. Estimate the value of Spyder using market multiples provide by the case. Explain
your choice of comparable companies and multiples. Would your valuation change
depending on the buyer type (public or private, strategic or financial)?

The Ultimate Question:

What choices does David Jacobs have, and how would his decisions (sell or not to sell,
and to whom he sells his shares) affect the valuation? What would you recommend him
to do?