Spyder Active Sports 2004 Case Study Analysis

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Spyder Active Sports 2004 Case Study Analysis

Prepare an analysis of the Spyder Active Sports 2004 case. Present your findings in a report to David Jacobs. The report should not exceed 5 pages of text (typed, double-spaced, 12- point font, one-inch margins), plus relevant exhibits. Include a brief introduction, analysis, and summary/conclusion. You will want to use an Excel spreadsheet to do the analysis for this assignment and it should address the following questions.

  • What is the ownership structure of Spyder? Why do the parties want to sell? What do they want to get out of the sale and what are their concerns?
  • Consider the options that Spyder has: (1) Sale to a strategic or financial buyer and (2) sale of a minority interest or a controlling interest. Which combination is likely to maximize the value of the company? Which owners would find this attractive?
  • Why might some owners prefer another alternative? Consider other factors that might impact the value of Spyder, namely, a control premium, a liquidity discount, and synergies. How should these be accounted for?
  • Prepare estimates of value based on DCF (discounted Cash Flow) and the trading and transaction multiples presented in the case. How well do these estimates reflect the considerations you believe to be most pertinent? Use the Spyder Student Spreadsheet provided.

Note that this spreadsheet allows you to employ three different valuation methods.

  • Trading Multiples: Value Spyder using market multiples of other companies in this space.
  • Transaction Multiples: Value Spyder using market multiples of other sales of companies to either strategic or financial acquirers.
  • Discounted Cash Flow: Present value of Spyder’s projected future cash flows.

Considering the alternatives discussed in the second question, which one would you choose if you were David Jacobs? Which one would you choose if you were a general partner in CHB Capital Partners? Who else is affected by this choice and how? What do you think Spyder will do?