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Black Diamond, Inc. Message Board

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  • bob_afet bob_afet May 12, 2010 5:32 PM Flag

    I'm holding for higher price--nice buy

    Well, I will show you my model on request but there are several issues with your valuation tex.

    First you can't assume WK bought a $25M EBITDA business just because that has been his aim for last 10 years. With a $135M purchase price for both assets you are basically saying it was just barely over a 5x EBITDA multiple - unlikely since one asset WK is paying himself(Gregory) and I'm sure he wouldn't settle for 5x. Additionly the combined assets have $113M revenue, so you are implicitly asserting a 22% profit margin(25/113)! We will be lucky for 15%! This is even more outragous when you consider that they are in relatively same industries and WK paid BD approx 1x rev and Gregory approx 2x Rev (not too big of a surprise).

    Another issue is you can't apply earnings after adjusting for NOL. These are finite assets and are not applicable to a potential acquirer when most of the valuation is locked up in terminal value past NOL expirations -this type of valuation would simply be incorrect to do.

    Again, if you think you will get 12 - 15X multiple on this company you are dreaming. You should ask yourself why would the BD CEO sell BD for 5x w/ 22% margins & double digit topline growth - especially if its not far from a 12 - 15x valuation. Quickly you will realize that he wouldn't do that deal and come a few weeks we will see that he didn't.

    Last but not least. Check your share count - that is also wrong even the press release said 21.6M not 20.4 (and I'm not sure if that estimate even factors for when WK and his execs have options in the money)

    "is expected that the Company’s Directors and officers will together own approximately 35% of the approximately 21.6 million shares of Clarus common stock outstanding at the closing of the transactions."

 
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