1 / 11

Rocky Mountain Advanced Genome Financial Evaluation

Rocky Mountain Advanced Genome Financial Evaluation. Evaluation team: Dunja Siuc Valković Sanja Vujić Perčić Mate Poropat Boris Drilo Nusret Šuvalić. Contents:. Introduction Assumptions Maximum price Big Sur must pay Price Big Sur should Offer Advisors opinion .

adanna
Download Presentation

Rocky Mountain Advanced Genome Financial Evaluation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Rocky Mountain Advanced GenomeFinancial Evaluation Evaluation team: Dunja Siuc Valković Sanja Vujić Perčić Mate Poropat Boris Drilo Nusret Šuvalić

  2. Contents: • Introduction • Assumptions • Maximum price Big Sur must pay • Price Big Sur should Offer • Advisors opinion

  3. Rocky Mountain Advanced Genome (RMAG), Colorado, was founded by seven research scientists in 1967 RMAG uncoded 60% of all human genes, and was using that information to design treatments for diseases Business segments: Diagnosic test kits Agricultural biogenetic engineering Human therapeutics Introduction

  4. Introduction • Big Sur Capital Management Company, California, established in 1968 as a hedge fund, later successful in “private equity” investments • The firms portfolio consists of 64 investments worth $2 billion

  5. Introduction • In 1996 negotiations neared conclusion for a private equity investment by Big Sur in RMAG • RMAG owners proposed to sell a 90% equity interest to Big Sur for $46 million. • The proceeds of equity sale would be used to finance the growth of the firm.

  6. Assumptions The company has no debt financing. Therefore the Market Value of debts = 0 If Economic value = Market Value of assets = Market Value of debts + Market Value of equity then Economic value = Market Value of assets = Market Value of equity = Total present value

  7. Maximum price Big Sur must pay • RMAG owners asked $46 million for 90% of equity • If $46 m = 90% then 100% = $51.1 m • RMAG MV of equity = $51.1 m = Total PV • Exhibit 6: the RMAG Total present value of $52 m is calculated with an approximate 5% annual growth rate

  8. Maximum price Big Sur must pay • the same growth rate (5%) results in Big Sur Total present value of $35 m • 90% of $35 m = $ 31.5 m

  9. Maximum price Big Sur must pay • growth rate of 7% - RMAG’s management believes as real due to a strong patent position • 100% of Total present value = $46 m • 90% of $46 m = $ 41.4 m

  10. Price Big Sur should offer • 3% rate based on GNP rate • for 3 % growth rate the Big Sur Total present value is $26 m • 100% of Total present value = $26 m • 90% of Total present value = $23.4 m

  11. Advisors opinion • Big Sur should start negotiations by offering a price of $23.4 m for 90% of equity • Big Sur should exit negotations if RMAG management insists on a price higher than $41.4 m

More Related