This project was completed by Intensity. Intensity joined Secretariat on February 1, 2023.

Background

Intensity was retained by a fast growing software company to determine an independent valuation range for the company. The company had been presented with a valuation range developed by an acquiring organization and wanted to evaluate whether the range was fair and reasonable.

Our Analysis

Intensity evaluated the methodology employed by the acquiring organization and found a number of factors that led to their valuation being inappropriately low. Our work included analyzing the acquiring company’s valuation methodology, improving upon this methodology, and developing an objective and defensible valuation using multiple approaches.

Our work included a refined analysis of value using several approaches including discounted cash flow (DCF), precedent transactions, and comparable company analyses. Intensity determined that many of the benchmark or comparison companies used in the acquiring company’s valuation were engaged in businesses that were very different from that of the target company. Intensity refined the comparison companies and refined the valuation model parameters, including discount rates, cash flow projections, and recent precedent transactions, to demonstrate that the value of the target company was significantly more than suggested by the acquiring organization.