Richard Burroughs provided valuation analysis and M&A advisory services to Applied Software Technology, Inc., a value-add reseller (VAR) business dealing in consulting services and software for the architecture, engineering, construction, and manufacturing industries. Burroughs delivered to management a valuation study and successfully negotiated a premium valuation with the counterparty. Burroughs guided the executive team through deal negotiations and due diligence, resulting in a successful closing in March of 2022. This closing represented the largest ever resulting entity within the Autodesk VAR channel globally.
VALUATION PROCESS:
Given the strong financial history of Applied Software, Burroughs combined a transaction comp study with a discounted cashflow model to derive a range of valuation via a football field analysis. Initial offers came in low relative to the valuation study; importantly, Burroughs successfully advised the ownership of Applied Software to field and win a higher, premium counter.
Multiples and other valuation assumptions were developed through a study of transaction and trading data and interviews with other financial professionals. WACC was used as the discount rate, and calculated based on assumptions derived from interviewing the acquiring party about their sources of capital.
A five-year projected cash flow model was generated, ending in a terminal year value. Burroughs ran a variety of sensitivities to show management what the value of their firm would be given different business performance scenarios.
Deliverables included:
Financial analysis and company valuation
Scenario planning and strategic guidance for due diligence
Investment memorandum
Results:
Burroughs gave management a clear understanding of what their business was worth and successfully guided them to negotiate a premium, satisfactory valuation for their business. Burroughs advised the ownership team through due diligence successfully, navigating ongoing negotiations and changes to the original terms of purchase, before handing off to legal to complete due diligence. Applied Software and Graitec signed the purchasing agreement and announced the acquisition in March of 2022.