Power of Terminal Value
Case Study Report The Power of Terminal Value ARCADIAN MICROARRAY TECHNOLOGIES,INC. Contents TOC o 1-3 h z u HYPERLINK l _Toc400235473 1. Introduction PAGEREF _Toc400235473 h 3 HYPERLINK l _Toc400235474 1.1. Object of Transaction PAGEREF _Toc400235474 h 3 HYPERLINK l _Toc400235475 1.2. Buyer Sierra Capital Partners PAGEREF _Toc400235475 h 3 HYPERLINK l _Toc400235476 1.3. Seller Arcadian Microarray Technologies, Inc. PAGEREF _Toc400235476 h 3 HYPERLINK l _Toc400235477 2. Methodology Analysis PAGEREF _Toc400235477 h 4 HYPERLINK l _Toc400235478 2.1. Terminal Value PAGEREF _Toc400235478 h 4 HYPERLINK l _Toc400235479 2.2. Book Value Model PAGEREF _Toc400235479 h 5 HYPERLINK l _Toc400235480 2.3. Liquidation Value Model PAGEREF _Toc400235480 h 6 HYPERLINK l _Toc400235481 2.4. Replacement Value Model PAGEREF _Toc400235481 h 6 HYPERLINK l _Toc400235482 2.5. Market Multiples PAGEREF _Toc400235482 h 6 HYPERLINK l _Toc400235483 2.6. Constant Growth Model PAGEREF _Toc400235483 h 8 HYPERLINK l _Toc400235484 2.6.1. Formula and Explanations PAGEREF _Toc400235484 h 8 HYPERLINK l _Toc400235485 2.6.2. Using Historical Growth Rates and Setting Forecast Horizons PAGEREF _Toc400235485 h 9 HYPERLINK l _Toc400235486 2.6.3. Growth Rate Assumption PAGEREF _Toc400235486 h 9 HYPERLINK l _Toc400235487 2.7. Conclusion Constant Growth Valuation suits Sierra Capital Partner PAGEREF _Toc400235487 h 10 HYPERLINK l _Toc400235488 3. Terminal Value for Arcadian Microarray Technologies PAGEREF _Toc400235488 h 11 HYPERLINK l _Toc400235489 3.1. Calculations with P/E PAGEREF _Toc400235489 h 11 HYPERLINK l _Toc400235490 3.2. Calculations with Constant Growth Valuation PAGEREF _Toc400235490 h 11 HYPERLINK l _Toc400235491 4. Suggestions and Conclusion PAGEREF _Toc400235491 h 12 HYPERLINK l _Toc400235492 4.1. Counteroffer PAGEREF _Toc400235492 h 12 HYPERLINK l _Toc400235493 4.2. Management Bonus PAGEREF _Toc400235493 h 12 Introduction Object of Transaction It