How would you value & structure this deal?

by a searcher

1 year ago

Well established company. Margins were negatively impacted by COGS in '22.  TTM appears to show a bounce back and growth from added bandwidth.  Recent impact makes bank financing a challenge.  

Seller is willing to consider a down payment + earnout.  

                       ###-###-#### ###-###-#### TTM                     2023p    2024p    2025p    2026p
Revenue###-###-#### ###-###-#### ###-###-####                          ###-###-#### ###-###-#### ###-###-#### 
Margin###-###-#### ###-###-#### ###-###-####                      ###-###-#### ###-###-#### 3990
Margin %       34%      37%     26%      35%                      36%        36%       38%        39% 
Adj EBITDA###-###-#### ###-###-#### 900                     ###-###-#### ###-###-#### 1.780

Major Balance Sheet Items
AR###-###-#### 900
Inventory###-###-#### 

How would you value and structure using this information at this time?

1 like
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44 comments

searcher from Harvard University

I think you should also track the working capital vs revenue % over years, as that will give you a sense of whether TTM revenue has an element of pulling back sales if there is a significant increase in networking capital %

3 weeks ago | like reply | 0 likes

investor from University of Rochester - William E. Simon Graduate School of Business

I would investigate if this is really a one time issue ,, or not. Also, the inability to pass through cost increases tells you something about pricing power and the structure of any contracts. Not sure I agree about the revenue based earn out as revenues were up in '22 v '21.

4 months ago | like reply | 0 likes

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