Fairness Opinion - Purchase Price Allocation

A multi-billion-dollar publicly traded company sought to complete its largest-yet acquisition in the recreational products industry. The acquirer’s board of directors engaged Stout to render an independent opinion as to whether the price to be paid in the transaction was fair, from a financial point of view.

Stout's due diligence involved an in-depth review of the transaction offer, site visits, interviews with senior management of both the target and buyer, an evaluation of financial and operational risks, and broader industry and market considerations. Our financial analysis included an income-based valuation via a discounted cash flow approach, as well as market multiples for guideline public companies and precedent M&A transactions. We also performed sensitivity analyses resulting in a distribution of values, and discretely highlighted the incremental value benefits to the acquirer as a result of the tax structure.

Upon completion of our analysis and due diligence, we delivered our opinion to the board, culminating in a unanimous vote in favor of the transaction – and a $230 million one-day increase in the buyer’s market capitalization following the transaction announcement. Once the deal closed, Stout's valuation expertise was again called upon to determine the purchase price allocation for tax and financial reporting purposes. Stout worked closely with the parties to the transaction and their advisors to assign values to inventory, real and personal property, and intangible assets within the timelines required by the purchase agreement and the acquirer’s external SEC reporting requirements.