8/12/2019 Precedent Transaction Analysis Investment Banks Ir Case Study

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INVESTMENT BANKS

Precedent transaction analysis as a part of deal evaluation support

CLIENT

An investment bank in the USA , wanted to conduct precedent transaction analysis in the insurance sector as part of a live deal evaluation support.

Sourced all the M&A deals that took place in the US insurance industry over the past five years along with key financials and valuation multiples

The analysis identified different valuation multiples and established suitable ranges for discussion by the client

PRECEDENT TRANSACTION ANALYSIS

RESEARCH FRAMEWORK & DELIVERABLES

SAMPLE ANALYSIS TEMPLATES

Insurance Sector: United States

DateAnnounced

DateEffective Target Name

Target MidIndustry

TargetNation Acquirer Name

AcquirerNation

% of

SharesAcq.

% Owned

AfterTransaction

Value of

Transaction( $mil ) P rice / Sales

Price /Earnings

Price / BookValue

Price toPremium *

1-Feb-07 1-Feb-07 Rubicon Financial Ins Svcs Inc Insurance United States Rubicon Financial Inc United States 100.0 100.0 0.11 0.00 nm - -

14-May-07 2-Jul-07 Capital City Holding Company Insurance United States North Pointe Holdings Corporation t United States 100.0 100.0 41.00 0.66 9.51 0.57 -

25-Jun-07 10-Sep-07 Associated Inds Ins Svcs Inc Insurance United States AmTrust Financial Services Inc United States 100.0 100.0 41.20 0.90 np - -

25-Jun-07 14-Sep-07 Professionals Direct Inc Insurance United States Hanover Ins Grp Inc United States 100.0 100.0 23.20 1.23 15.36 1.77 -

22-Feb-07 28-Sep-07 Great American Finl Res Inc Insurance United States American Financial Group Inc United States 24.4 100.0 244.57 1.17 18.74 1.09 13.22

6-Sep-07 1-Nov-07 Mercy CarePlus Insurance United States Molina Healthcare Inc United States 100.0 100.0 74.00 0.59 7.68 1.69 -

7-Sep-07 30-Nov-07 KMG America Corp Insurance United States Humana Inc United States 100.0 100.0 137.74 0.68 nm 0.72 69.40

21-Sep-07 18-Dec-07 RTW Inc Insurance United States Rockhill Holding Co United States 100.0 100.0 66.27 1.29 29.23 1.20 53.70

10-Apr-08 10-Apr-08 Somers-Pardue Agency Inc Insurance United States First Southeast Ins Svcs Inc United States 100.0 100.0 18.80 2.51 np - -

26-Feb-08 29-Apr-08 National Med Health Card Sys Insurance United States SXC Health Solutions Corp United States 100.0 100.0 62.04 0.10 nm 2.36 13.31

3-Jan-08 30-Apr-08 North Pointe Holdings Corp Insurance United States QBE Holdings Inc United States 100.0 100.0 144.74 1.28 14.02 1.48 50.23

15-Jan-08 18-Jul-08 Financial Industries Corp Insurance United States Americo Life Inc United States 100.0 100.0 74.41 0.97 20.69 1.06 30.63

13-Mar-08 1-Aug-08 National Atlantic Hldg Corp Insurance United States Palisades Group United States 100.0 100.0 70.10 0.38 nm 0.48 14.47

7-Aug-08 29-Sep-08 Employers Security Holding Co Insurance United States Eastern Insurance Hldgs Inc United States 100.0 100.0 14.90 0.84 np - -

14-Oct-08 14-Oct-08 Smith Administrators LLC Insurance United States Meritain Health Inc United States 100.0 100.0 7.00 9.33 np - -10-Jan-08 31-Oct-08 AmCOMP Inc Insurance United States Employers Holdings Inc United States 100.0 100.0 190.58 0.81 12.03 1.14 39.98

2 2-Ap r-0 9 2 2-Ap r-0 9 Ti tl e I ns ur an ce C om pa ni es o f L an dAm l I .Insurance United States Fidelilty United States 100.0 100.0 247.00 0.08 nm 0.33 -

2-Jul-09 2-Jul-09 Commercial Mutual Insurance Co Insurance United States DCAP Group Inc United States 100.0 100.0 3.75 0.42 4.18 1.87 -

22-Jun-09 13-Nov-09 Specialty Underwriters Inc Insurance United States Tower Group Inc United States 100.0 100.0 106.24 0.69 21.45 0.76 69.70

Mean 1.26x 15.29x 1.18x 39.40x

Notes: Trimmed Mean 0.96x 14.94x 1.18x 30.79x

* Price to Premium = Offer Price to Target Stock Price Premium 1 Day Prior to Announcement Median 0.81x 14.69x 1.11x 39.98x

np = not provided High 9.33x 29.23x 2.36x 69.70x

nm = not meaningful Low 0.0010x 4.18x 0.330x 13.22x