Alliance Healthcare Services acquired by Tahoe Investment Group Co.: fairness opinion by Lazard
Deal terms
Implied value per share by method vs. $13.25 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Lazard to the special committee
Discounted cash flow assumptions
Valued as of December 31, 2016; included present value of NOLs and prepaid taxes discounted at 9.0%-10.0% using 35.0% federal and 7.53% state tax rates; equity value derived by deducting pro forma debt attributable to Alliance including $9.7 million after-tax refinancing fees/expenses; divided by fully diluted shares as of March 31, 2017. Sole methodology relied upon for the opinion.
Selected public companies (2)
RadNet, Inc. · Digirad Corporation
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / CY2017E Adjusted EBITDA | 6.9x | — | 7.3x | 6.9x–7.3x | $21.49–$25.37 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Selected Squeeze-Out Transactions Analysis (premiums paid) | 15 selected squeeze-out transactions from January 1, 2012 to April 7, 2017 with transaction value greater than $50 million involving U.S.-listed targets and majority stakeholders buying out remaining stakeholders. Applied median premium of 30.6% and mean premium of 54.9% to Alliance's unaffected share price of $7.95. Observed maximum premium 284.6%, minimum 6.5%, 25th percentile 23.6%, 75th percentile 60.6%. Informational purposes only. | $10.38–$12.32 |
| 52-Week High/Low Trading Prices | Daily closing prices of common stock for the 52 weeks ended December 9, 2016 ranged from $5.77 (August 2, 2016) to $9.30 (December 18, 2015). Informational purposes only. | $5.77–$9.30 |
Aggregate fee of $2.8 million; portions payable upon engagement and during engagement; $1.4 million payable upon rendering of opinion (less previously received payments) and $1.4 million contingent upon closing. Alliance may also pay a discretionary fee determined by the Special Committee upon closing.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $547M | $569M | $589M | $609M | 3.7% |
| Revenue growth | 6.4% | 3.9% | 3.6% | 3.5% | |
| EBITDA | $123M | $126M | $129M | $132M | 2.4% |
| EBITDA growth | 1.9% | 3.0% | 2.1% | 1.9% | |
| EBITDA margin | 22% | 22% | 22% | 22% | |
| Implied EV / EBITDA | 5.6x | 5.4x | 5.3x | 5.2x |
Year-1 growth is against LTM at announcement ($514M revenue, $120M EBITDA); later years are year over year.
Three sets of unaudited projections are disclosed: the August Long-Range Planning Model (FY2016-FY2020; net revenue $514.1M in 2016 rising to $609.3M in 2020, Adjusted EBITDA $140.6M to $160.3M), the December Long-Range Planning Model (FY2017-FY2023; net revenue $548.3M in 2017 to $662.2M in 2023, Adjusted EBITDA $142.4M to $183.1M), and the Special Committee Forecasts (FY2017-FY2021; net revenue $548.3M in 2017 to $614.7M in 2021, Adjusted EBITDA $142.6M to $161.8M). Lazard was authorized to rely solely on the Special Committee Forecasts, which eliminated future acquisitions and assumed moderate pricing/cost-saving reductions and higher capex. Unlevered free cash flow to the Company under those forecasts was $43.6M in 2017 rising to $60.0M in 2021.
Process notes
Other Specialty Outpatient Facilities fairness opinions
- Surgical Care Affiliates / Optum 2017 · 16.4x EV/EBITDA
- AmSurg / Envision Healthcare Holdings 2016 · 12.0x EV/EBITDA
- NovaMed / Surgery Partners 2011 · 7.8x EV/EBITDA
- HealthTronics / Endo Health Solutions 2010 · 8.7x EV/EBITDA
- Dialysis Corporation of America / U.S. Renal Care 2010 · 14.1x EV/EBITDA
- FONAR / Damadian family Acquisition Group 2025 · 4.3x EV/EBITDA
All Specialty Outpatient Facilities opinions → · Lazard opinions