Spyder_ Final
- 1. Cisco Martinez September, 27 2011 Spyder Active Sports, Inc.
- 2. Executive summary 1978 19861982 1997 1998 2004 Jacobs starts Spyder Partners with Shimokubo 50/50 partnership CHB acquires 22% of Spyder CHB contributes additional $2MM for 37.9% CHB exit CHB 37.9% David Jacobs 25.4% Shimokubo 25.4% Jake Jacobs 11.3% Spyder timeline Spyder ownership as of 2004 Spyder Active Sports, Inc. David Jacobs founder 40 years of outdoor sporting apparel market experience Spyder founded in 1978 focused on high end ski retail market Tsunehisa Shimokubo partnership Jake Jacobs (Davids son) - product design, international and outside business experience 1995 sales plateau ($10-15MM) CHB Closely Held Businesses PE firm focused on business improvement to meet IRR goals Contributions: 1. Organizational structure hire Senior Marketing Executive 2. IT procurement and implementation 3. Develop concept shop or fixed program 5/15/20152
- 3. Decisions for Spyder What is the Firms Value? Strategic Acquirer or Financial Acquirer? Total Company or Minority Stake? 5/15/20153
- 4. Assumptions for DCF For Financial Acquirer 30% Discount Rate 27.5% Growth Rate Financial Acquirers tend to demand higher rates of return, and generally are more aggressive in their forecasts For Strategic Acquirer 25% Discount Rate 20% Growth Rate Added 25% for possible synergies 5/15/20154
- 5. Valuation estimates $40 $60 $80 $100 Comparable Companies Comparable Transactions DCF Strategic w/Synergies DCF Financial Buyer 5/15/20155
- 6. Considerations for the owners CHB If sold to Financial Buyer: Value of CHB Equity = $36.8MM IRR = 38% If sold to Strategic Buyer: Value of CHB Equity = $24.9MM IRR = 30% Jacobs At age 70, to exit himself or not? Sell controlling ownership or minority stake Sell control higher price How will Spyder proceed if bought out? Stability for his sons 5/15/20156
- 7. What happened to Spyder? In 2004 Apax Partners buys 85% of Spyder for $100MM 42% IRR for CHB After bidding war between Apax and VF Corp, a strategic buyer, Jacobs chose financial buyer Apax Apax wanted current leadership Jacobs serves as Chairman of the Board and son Jake on Board Growth plan: market segmentation & multi-season In 2008 Spyder acquires Cloudveil Mountain Works Multi-seasonal apparel outdoor, snow sports, fly-fishing, casual 5/15/20157
- 9. DCF model financial buyer FY2004 FY2005E FY2006E FY2007E FY2008E Terminal EBITDA 9,582.00$ 13,771.00$ 16,983.00$ 21,777.00$ 27,895.00$ less Depr & Amort 744.00$ 1,078.00$ 2,097.00$ 3,260.00$ 3,098.00$ EBIT 8,838.00$ 12,693.00$ 14,886.00$ 18,517.00$ 24,797.00$ EBIT x 1-tax rate (45%) 4,860.90$ 6,981.15$ 8,187.30$ 10,184.35$ 13,638.35$ plus Depr & Amort 744.00$ 1,078.00$ 2,097.00$ 3,260.00$ 3,098.00$ Less NWC 69.00$ 1,590.00$ 929.00$ 1,292.00$ 1,459.00$ Less CapEx 1,797.00$ 2,619.00$ 3,000.00$ 3,500.00$ 4,250.00$ FCF 3,738.90$ 3,850.15$ 6,355.30$ 8,652.35$ 11,027.35$ 306,845.00$ DCF 2,961.65$ 3,760.53$ 3,938.26$ 3,860.98$ 82,642.28$ Discount Rate 30% Average Expected Growth Rate 27.5% NPV $97,163.70 87,447.33$ 106,880.08$ IRR 38% Year Return (Investment) 0 (2,500.00)$ 1 (2,000.00)$ 2 0 3 0 4 0 5 0 6 0 7 36,825.04$ 5/15/20159
- 10. DCF model strategic buyer FY2004 (actual) FY2005E FY2006E FY2007E FY2008E Terminal EBITDA 9,582.00$ 13,771.00$ 16,983.00$ 21,777.00$ 27,895.00$ less Depr & Amort 744.00$ 1,078.00$ 2,097.00$ 3,260.00$ 3,098.00$ EBIT 8,838.00$ 12,693.00$ 14,886.00$ 18,517.00$ 24,797.00$ EBIT x 1-tax rate (45%) 4,860.90$ 6,981.15$ 8,187.30$ 10,184.35$ 13,638.35$ plus Depr & Amort 744.00$ 1,078.00$ 2,097.00$ 3,260.00$ 3,098.00$ Less NWC 69.00$ 1,590.00$ 929.00$ 1,292.00$ 1,459.00$ Less CapEx 1,797.00$ 2,619.00$ 3,000.00$ 3,500.00$ 4,250.00$ FCF 3,738.90$ 3,850.15$ 6,355.30$ 8,652.35$ 11,027.35$ 111,580.00$ DCF 3,080.12$ 4,067.39$ 4,430.00$ 4,516.80$ 36,562.53$ Discount Rate 25% Average Expected Growth Rate 20% +25% in synergies NPV $52,656.85 $65,821.07 47,391.17$ 59,238.96$ 57,922.54$ 72,403.17$ IRR 30% Year Return (Investment) 0 (2,500.00)$ 1 (2,000.00)$ 2 -$ 3 -$ 4 -$ 5 -$ 6 -$ 7 24,946.18$ 5/15/201510
- 11. Multiples Date Date Ent.Value LTMSales LTMEBITDA Sales EBITDA Acquiror Target Announced Effective ($millions) ($millions) ($millions) Multiple Multiple ColumbiaSportswearCo. MountainHardwearInc. 3/13/03 4/1/03 36 31 3.2 1.2 11.1 VFCorp. NauticaEnterprisesInc. 7/7/03 8/27/03 600 694 66 0.9 9.1 NikeInc. ConverseInc. 7/9/03 9/4/03 335 205 36 1.6 9.4 BearStearns&Co. CameIBakInc. 11/6/03 12/2/03 209 74 25 2.8 8.2 Transaction multiples Trading multiples Five-Year Company Name Industry Betab MarketValueofEquityc LTMInterest-Bearing Debt AverageDebt-to-Value LTMSales LTMEBITDA Multiplier Adidas-Salomon AGd Sports Apparel,Footwear,&Equipment 0.81 4,302 1,459 0.39 6,221 586 7.3 Columbia SportswearCo. Sports Apparel 1.48 2,239 20 0.06 990 220 10.2 K2Inc. Sports Equipment 1.36 559 209 0.41 839 63 8.9 QuiksilverInc.f Sports Apparel 1.01 1,217 138 0.17 1,039 130 9.4 Skis Rossignol SA.g Sports Equipment&Apparel 0.55 174 118 0.44 479 25 7.0 VF Corp. Apparel,incl.Sports Apparel 0.59 5,113 994 0.2 5,390 725 7.1 5/15/201511