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ProAssurance acquired by The Doctors: fairness opinion by Goldman Sachs

Announced March 19, 2025 · One-step merger · All cash · DEFM14A filed May 14, 2025
Outsourced Services Professional Liability Insurance
Enterprise value
$1.3B
EV / LTM EBITDA
12.4x
EBITDA $105M · 9% margin
EV / LTM revenue
1.13x
revenue $1.2B
DCF discount rate
7.5%–9.0%
Exit multiple

Deal terms

ConsiderationAll cash
Price per share$25.00
Premium58.8%
Premium basisclosing price of $15.74 on March 18, 2025, last trading day prior to announcement
StructureOne-step merger
Termination fee$52.6M
Reverse termination fee$52.6M
Go-shopNone
Outside date—
FilingDEFM14A · EDGAR index

Implied value per share by method vs. $25.00 offer

Precedent transactions — P / Book Value (incl. AOCI) $21.04 – $40.78
Discounted cash flow $16.81 – $28.93
Illustrative Present Value of Future Share Price Analysis $11.57 – $23.38
Premia Paid Analysis $17.03 – $22.93

Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.

Opinion of Goldman Sachs to the target board

Delivered March 19, 2025 · Fee $26.0M ($21.0M contingent on closing)

Discounted cash flow assumptions

Discount rate7.5%–9.0%
Basiscost of equity derived via CAPM
Terminal valueExit multiple
Perpetuity growth—
Exit multiple0.7x–1.1x terminal year exit price to Book Value (incl. AOCI)
Projection period2025E-2029E
Projections usedFinancial Projections prepared by ProAssurance management
Implied value per share$16.81–$28.93

Illustrative dividend discount analysis: discounted capital return (dividends) for CY2025-2029 plus terminal value to present as of December 31, 2024, using mid-year convention.

Selected precedent transactions (8)

DateTargetAcquirerMultiple
2023-02Argo Group International Holdings, Inc. (f/k/a Argo Group International Holdings, Ltd.)Brookfield Reinsurance Ltd.0.9x P / BV (incl. AOCI)
2021-01ProSight Global, Inc.TowerBrook Capital Partners L.P.; Further Global Capital Management1.0x P / BV (incl. AOCI)
2018-08The Navigators Group, Inc.The Hartford Financial Services Group, Inc.1.7x P / BV (incl. AOCI)
2018-06AmTrust Financial Services, Inc.Stone Point Capital LLC; K-Z Evergreen, LLC1.0x P / BV (incl. AOCI)
2017-09Pacific Compensation CorporationCopperPoint Mutual Insurance Company1.3x P / BV (incl. AOCI)
2017-05OneBeacon Insurance Group, Ltd.Intact Financial Corporation1.6x P / BV (incl. AOCI)
2016-12Ironshore Inc.Liberty Mutual Insurance1.4x P / BV (incl. AOCI)
2015-05Ironshore Inc.Fosun International Ltd.1.2x P / BV (incl. AOCI)
MultipleLowMedianHighRange appliedImplied per share
P / Book Value (incl. AOCI)0.9x—1.7x 0.9x–1.7x $21.04–$40.78

Other analyses

AnalysisSummaryImplied per share
Analysis of Implied PremiumsPremiums implied by $25.00 per share: 58.8% to the $15.74 closing price on March 18, 2025; 110.8% to the $11.86 closing price on March 18, 2024 (day before original indication of interest); 44.4% to the 52-week high closing price of $17.31; 129.6% to the 52-week low closing price of $10.89; 64.8% to the 30-trading day VWAP of $15.17; 63.9% to the 60-day VWAP of $15.25; and 58.3% to the 90-day VWAP of $15.79.—
Illustrative Present Value of Future Share Price AnalysisApplied price to Book Value (incl. AOCI) multiples of 0.50x to 1.00x to projected book value per share for fiscal years 2025 through 2027, added cumulative dividends per share, and discounted to December 31, 2024 at 8.25% (midpoint of cost of equity range).$11.57–$23.38
Premia Paid AnalysisReviewed all-cash acquisitions of U.S. public targets announced 2015 through March 18, 2025 with equity values greater than $500 million; median 1-day premium 22.6%, 25th percentile 8.2%, 75th percentile 45.7%. Applied 8.2%-45.7% to the $15.74 closing price on March 18, 2025.$17.03–$22.93

Transaction fee estimated at approximately $26 million; $5 million payable at announcement of the merger, remainder contingent upon consummation. Engagement letter dated September 18, 2024, supplemented March 10, 2025.

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Management projections

Goldman Sachs used the "Financial Projections" — certain internal financial analyses and forecasts for ProAssurance prepared by ProAssurance management and approved for Goldman Sachs' use. The projections covered calendar years 2025 through 2029, including capital return/dividends to holders of ProAssurance common stock and projected Book Value (including AOCI) per share; an earlier set (the "April 2024 Projections") was used for preliminary analysis of The Doctors Company's September 9, 2024 proposal. Book Value (incl. AOCI) was $1.202 billion as of December 31, 2024. No specific revenue or EBITDA figures were disclosed in the sections provided.

Process notes

Insurance transaction valued on price-to-book rather than EBITDA multiples; Goldman Sachs used a dividend discount model in lieu of a traditional DCF and no selected public companies analysis was disclosed. Negotiations ran from March 2024 through March 2025, with proposals escalating from $22.00 (November 27, 2024, initially with contingent step-ups to $24.00/$26.00 based on regulatory remedies) to $24.00 (January 17, 2025) and finally $25.00 per share; ProAssurance had countered at $29.00. A Transaction Committee of the ProAssurance Board was involved. The reverse termination fee of $52.6 million was negotiated as a percentage of equity value (proposals ranged from 3% to 6%, settling at ~4%); ProAssurance may also owe a regulatory termination fee in specified circumstances. The Doctors Company was advised by Waller Helms and Mayer Brown; ProAssurance's legal advisors were Simpson Thacher & Bartlett and Willkie Farr. Goldman Sachs had no fee-generating engagements with either party in the prior two years.

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