Please comment on the following information and help me understand it??? Thanks

 

 post a comment of one to two paragraphs on how you approached the Spyder negotiation and the overall results your group achieved. If you were to do this over again, would you handle anything differently?

 

Teams	Members	Issues	Price—Open ($ mn)	Price—Fair ($ 'mn)	Price—Walkaway ($ 'mn)
1. Strategic Buyer	Rebecca Broussard; Christine Fragale; Ronek Patel; Nick Douglas	Overvaluation; Macro and business risks; Aligning culture	85	126	152
2. Spyder	Daniel Shepard, Kristina Scott, Lydia Perry, Patrick Pindar, Yenifer Ubri	Control on brand; Job losses for key employees; Retaining minority stake; Valuation comfort for CHB	130	126	110
3. Financial Buyer
4. Spyder

 

 

Negotiation: From the above table it's clear that there was a potential zone of possible agreement for both negotiations, as the walkaway prices overlap and both teams have exact same fair value assessment.

 

Results:

Group 1 & 2 were able to close the deal at 110K. There is a big gap in opening bids, but fair value assessment is the same and the walkway prices overlap so negotiations should have been easy, but it seems both parties found it challenging to justify their bids initially. Management retention for 1 year and employment security of key personnel was negotiated as part of 110k deal.

 

Perhaps buyer can try to explain intrinsic valuation estimate and negotiate on other items such as retaining key personnel and providing job security to top management. It was also in buyer's best interest to retain current management for smooth transition. Whereas seller can defend valuation using DCF with synergies and using strategic acquisitions from transaction comps.

 

 

Valuation of Spyder: Averaging the three methods and using the forward-looking 2005 ratios, the value is around $132.5 million. Actual Outcome: Spyder sold 80 percent of the company to a financial buyer for $100 million, implying a total EV of $125 million for the company.