Fairness opinions › Medical Devices and Supplies › 2016

Symmetry Surgical acquired by Roundtable Healthcare Partners: fairness opinion by Stifel

Announced May 2, 2016 · One-step merger · All cash · DEFM14A filed May 31, 2016

Medical Devices and Supplies Medical Supplies

Enterprise value

$129M

EV / LTM EBITDA

12.6x

EBITDA $10.3M · 11% margin

EV / LTM revenue

1.44x

revenue $89.5M

DCF discount rate

13.0%–17.0%

Exit multiple

Deal terms

ConsiderationAll cash

Price per share$13.10

Premium26.1%

Premium basis1-day closing price of $10.39 prior to the May 2, 2016 announcement

StructureOne-step merger

Termination fee$5.6M

Reverse termination fee—

Go-shopNone

Outside date—

FilingDEFM14A · EDGAR index

Implied value per share by method vs. $13.10 offer

Selected companies — EV / 2015 EBITDA $10.07 – $11.78

Selected companies — EV / 2016E EBITDA $11.87 – $13.93

Selected companies — EV / 2017E EBITDA $12.25 – $14.61

Precedent transactions — EV / LTM EBITDA $10.93 – $12.64

Discounted cash flow $12.47 – $15.81

Leveraged Buyout Analysis $11.62 – $12.85

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

Opinion of Stifel to the target board

Delivered May 2, 2016 · Fee $3.1M ($2.1M contingent on closing), $1.0M on delivery of the opinion

Discounted cash flow assumptions

Discount rate13.0%–17.0%

BasisWeighted average cost of capital analysis using the selected publicly traded companies and Stifel's estimates for Symmetry

Terminal valueExit multiple

Perpetuity growth—

Exit multiple10.5x–12.5x 2020E EBITDA

Projection period2016E (from Q2 2016)-2020E

Projections usedSymmetry management projections

Implied value per share$12.47–$15.81

Terminal EBITDA multiple range based on multiples observed in the selected publicly traded companies analysis.

Selected public companies (9)

Bovie Medical Corporation · CONMED Corporation · Integra LifeSciences Holdings Corporation · MISONIX, INC. · AngioDynamics, Inc. · CryoLife, Inc. · Exactech, Inc. · Merit Medical Systems, Inc. · RTI Surgical, Inc.

Multiple	Peer low	Peer median	Peer high	Range applied	Implied per share
EV / 2015 EBITDA	—	—	—	—	$10.07–$11.78
EV / 2016E EBITDA	—	—	—	—	$11.87–$13.93
EV / 2017E EBITDA	—	—	—	—	$12.25–$14.61

Selected precedent transactions (16)

Date	Target	Acquirer	Multiple
2015-11-15	SurgiQuest, Inc.	CONMED Corporation	—
2015-09-01	Synergetics USA, Inc.	Valeant Pharmaceuticals International, Inc.	—
2015-06-18	Lumenis Ltd.	XIO Fund I LP	—
2014-09-12	Medtronic Xomed Instrumentation, SAS	Integra LifeSciences Holdings Corporation	—
2014-06-24	Medical Action Industries Inc.	Owens & Minor, Inc.	—
2014-06-13	TRUMPF International Beteiligungs-GmbH	Hill-Rom Holdings, Inc.	—
2014-02-18	Berchtold Holding, AG	Stryker Corporation	—
2013-08-05	Theragenics Corporation	Juniper Investment Company, LLC	—
2013-06-17	Péters Surgical	Eurazeo PME	—
2012-12-18	MicroSurgical Technology, Inc.	Halma p.l.c.	—
2012-07-23	Aspen Surgical Products Holding, Inc.	Hill-Rom Holdings, Inc.	—
2012-03-22	Newport Medical Instruments, Inc.	Covidien public limited company	—
2012-01-30	NM Holding Company, Inc.	AngioDynamics, Inc.	—
2011-12-12	Synovis Life Technologies Inc.	Baxter International Inc.	—
2011-12-11	Codman & Shurtleff, Inc.	Symmetry Medical Inc.	—
2011-07-07	PEAK Surgical, Inc.	Medtronic, Inc.	—

Multiple	Low	Median	High	Range applied	Implied per share
EV / LTM EBITDA	—	—	—	—	$10.93–$12.64

Other analyses

Analysis	Summary	Implied per share
Implied Premiums Paid Analysis	Premiums implied by the $13.10 price vs. closing prices: 1-day $10.39 (26.1%), 5-day $9.98 (31.3%), 1 month $10.45 (25.4%), 2 months $9.54 (37.3%), 3 months $8.82 (48.5%), YTD 12/31/2015 $9.20 (42.4%), 6 months $8.54 (53.4%), 1 year $7.72 (69.7%), since spin-out 12/5/2014 $7.74 (69.3%).	—
Leveraged Buyout Analysis	Assumed exit at 11.5x 2020E EBITDA (midpoint of public company range), leverage of 5.5x LTM EBITDA at close, 8.0% interest rate; solved for purchase prices delivering 20% and 25% IRRs using management projections for 2016 (from Q2) through 2020.	$11.62–$12.85

Approximately $3.1 million aggregate fee; $1.0 million payable upon rendering of the fairness opinion and approximately $2.1 million contingent upon consummation of the merger. Expense reimbursement and indemnity also provided. Stifel previously received approximately $6.5 million for advising Symmetry and its former parent in the 2014 Tecomet sale and spin-out.

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Management projections

Stifel used internal financial projections prepared by Symmetry management covering calendar years 2016 (beginning in the second quarter of 2016) through 2020 for both its discounted cash flow and leveraged buyout analyses, including projected unlevered free cash flows, 2020 EBITDA and the projected 2020 capital structure. Specific revenue and EBITDA dollar figures were not disclosed in the summarized opinion section. Selected public company multiples for 2016 and 2017 were based on estimates and projections available to Stifel.

Process notes

All-cash going-private sale of Symmetry Surgical to a newly formed entity owned by RoundTable Healthcare Partners IV, L.P. and RoundTable Healthcare Investors IV, L.P. Single fairness opinion delivered by Stifel to the Symmetry board on May 2, 2016; no special committee noted. Termination fee of $5.6 million (reduced by any previously paid Parent expense reimbursement), plus expense reimbursement of up to $2.75 million in certain circumstances where the termination fee is not payable. Stifel had been retained October 6, 2015 and ran a solicitation of third-party indications of interest; Stifel previously earned ~$6.5 million advising on the 2014 Tecomet sale/spin-out.

Other Medical Devices and Supplies fairness opinions

Vascular Solutions / Teleflex 2016 · 25.7x EV/EBITDA
EndoChoice Holdings / Boston Scientific 2016
HeartWare International / Medtronic 2016
Hansen Medical / Auris Surgical Robotics 2016
LDR Holding / Zimmer Biomet Holdings 2016
Newport / MKS Instruments 2016 · 8.2x EV/EBITDA

All Medical Devices and Supplies opinions → · Stifel opinions