90.2K

Verified Solution

Link Copied!

Discuss which of the 4 final bids is the best offer for Cardinal/Sell-side Advisor and how you determined this conclusion.

Thompson Associates is an investment banking firm representing Cardinal Inc. ("Target), who has engaged Thompson as the sell-side advisor for the sale of their largest business segment, Industrial Tools. Based on its due diligence, Thompson's valuation models indicate a purchase price range of $220.0 million to $265.0 million for the proposed sale of Cardinal's business segment. During extensive meetings between the sell-side advisor team and Cardinal senior management several key considerations became apparent to the investment bank. Cardinal management desires a fair price that is supported by the sell-side advisor's valuation models. Given the new strategic direction that Cardinal is planning to take, timely completion of the business segment sale is an important consideration. The senior management of Cardinal would also like to have minimum business disruption during the auction process in order to maintain employee morale in their other business segments. After 3 months and the completion of the Second Round of the sell-side M&A process, Cardinal and the sell-side advisor received the following binding offer bids from the final 4 bidders. The chart below summarizes key criteria from each bid made. Criteria Bidder A Bidder B Bidder C Bidder D Type of Bidder Strategic Financial Sponsor Financial Sponsor Strategic $260.0MM $210.0MM $235.0MM $250.0 Offer Bid Price Form of Consideration Cash/Stock Cash Cash/Stock Cash Bidder Financing Status Complete Pending Pending 10% workforce reduction None Replace CEO/CFO Complete Provide 3-year management contracts Employee/Management Changes Expected & Follow up Items Board Approval None Board/Regulatory Approval Regulatory Approval Based on the above, answer the following questions

Answer & Explanation Solved by verified expert

See Answer