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The Client
Closely-held and conservatively financed; revenue and
profit doubling yearly; a leader in new ANDAs and quick FDA approval, relying
on partnering to hedge R&D risk and outsource distribution.
The Deal
Exclusive R&D and marketing alliance with an
existing partner, including put and call options for the firm in a narrow
window seven years hence.
The Need: Corporate Valuation
As soon as possible, management needed answers to the
following questions:
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“What are we worth today?”
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“What might we be worth in seven years?”
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“How can we negotiate a price today for a deal that
only might happen in seven years?”
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The Solution
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Determine fair market value from perspective of the
buyer, who is apt to divest selected parts right after closing the deal.
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Develop hybrid model with the comparable company
method, the cost method, and real options for various parts of the business.
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Create a valuation formula to be inserted into the
option agreement.
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Prepare the CEO, chief scientist and operations chief
for the negotiations, especially valuation concepts.
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Participate in negotiations as client advisor.
The Outcome
Deal completed.
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