Bradstreet Case
Initial Contact
If we were contacted by Quinstreet with an acquisition offer the first thing our team would do is determine the exact details of the offer(s) and when the final acceptance date for the Quinstreet offer. This will ensure that we know our due diligence timeline and are able to shop around to ensure that the current offer is right for the market.
Valuation
For the valuation we chose comparable companies to estimate revenue and EBITDA multiples. We chose Google, Yahoo, Facebook, Twitter, and GoDaddy as they are all internet based organizations. We sourced enterprise value, revenue, and EBITDA values from Yahoo Finance to calculate the average EV/Revenue and EV/EBITDA multiples of 8.0x and 14.5x, respectfully (Figure 1). These values, however, represent multiples current to 2016 for large, established companies. To estimate for multiples relevant to 2004 for this case we scaled back the our estimations by ½ based on the prestige of the comparable companies, the growth of tech companies since 2004, and current economic conditions.
Offer Concerns …show more content…
In the other options we receive a lower initial payout however have the added bonus of later payment and the catch of possibly getting our company back. Our concerns with options two and three is the catch - that at any time Quinstreet could choose to stop payments and return all of Deepstar’s assets back. Although we can obtain more money in a set time frame than we could by simply taking the first option, we also risk taking option two and Quinstreet backing out before the second year, or taking option three and receiving even less if Quinstreet backed out after the second year. Not only would the catch hurt us financially but it will look bad in the marketplace should we choose to do an IPO in the future, and it could also affect our ability to gain another potential buyout
If we were contacted by Quinstreet with an acquisition offer the first thing our team would do is determine the exact details of the offer(s) and when the final acceptance date for the Quinstreet offer. This will ensure that we know our due diligence timeline and are able to shop around to ensure that the current offer is right for the market.
Valuation
For the valuation we chose comparable companies to estimate revenue and EBITDA multiples. We chose Google, Yahoo, Facebook, Twitter, and GoDaddy as they are all internet based organizations. We sourced enterprise value, revenue, and EBITDA values from Yahoo Finance to calculate the average EV/Revenue and EV/EBITDA multiples of 8.0x and 14.5x, respectfully (Figure 1). These values, however, represent multiples current to 2016 for large, established companies. To estimate for multiples relevant to 2004 for this case we scaled back the our estimations by ½ based on the prestige of the comparable companies, the growth of tech companies since 2004, and current economic conditions.
Offer Concerns …show more content…
In the other options we receive a lower initial payout however have the added bonus of later payment and the catch of possibly getting our company back. Our concerns with options two and three is the catch - that at any time Quinstreet could choose to stop payments and return all of Deepstar’s assets back. Although we can obtain more money in a set time frame than we could by simply taking the first option, we also risk taking option two and Quinstreet backing out before the second year, or taking option three and receiving even less if Quinstreet backed out after the second year. Not only would the catch hurt us financially but it will look bad in the marketplace should we choose to do an IPO in the future, and it could also affect our ability to gain another potential buyout