BLUNTLY MEDIA: A PRIVATE COMPANY VALUATION Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

BLUNTLY MEDIA: A PRIVATE COMPANY VALUATION Case Solution

Problem Diagnosis

Paterson Publishing is one of the Fortune 200 companies and the management of this public company had shown interest in acquiring Bluntly Media Holdings. Bluntly Media is one of the clients of the Slate stone Group and now Jackson Ferdy, who is an intern at this group, is assessing and evaluating the target sell side deal given the current political and economic situation of US and the market prospects for the Direct Marketing Industry.

This case attempts to perform the valuation of Bluntly Media Company as a standalone company, and also to evaluate the strategic fit of the proposed acquisition by Paterson Publishing Company. The valuation of the company would be performed from the perspective of Slate stone Group therefore, the objective is to achieve a maximum price for Bluntly Media Company. The valuation for the company would be performed through a range of different valuation methods to attain a higher price for the company.

Case Analysis

The analysis of the case has been performed by analyzing and assessing a range of different factors. However, we first begin with an analysis of the external and the internal environment of Bluntly Media Holdings.

External ‘size up’ Analysis – Economic Environment

In October 2013, the political environment of the United States was not stable and the political climate placed a huge cloud of uncertainty over the global economy. This was because of two major political issues which may have affected the proposed acquisition of Bluntly Media Company. These two issues were the shutdown of the US government and the US debt ceiling. First of all, if we talk about the shutdown of the US government then the government had curtailed the non-critical as well as the routine operations. This had created a negative impact on the economic confidence of the country.

Most of the executives put their acquisition deals on hold because it was still uncertain that when the US government would reopen and make the changes to the budget. If this delay continued for long, then the cost of raising the capital would also increase significantly due to the higher risk in the economy and lose economic confidence. Projecting the future of the target companies was also difficult given the current economic climate. Therefore, the lack of the confidence in the economy had discouraged the mergers and the acquisitions market.

Apart from this, another issue faced by the US economy was that it had reached its maximum borrowing limit in October 2013. This was creating uncertainty in the global financial crisis and would likely cause an increase in the capital raising costs. Bluntly was a middle market company and it was positioned in a stable industry, which had achieved a good track record during the Global financial crisis. Bluntly Media was operating in an industry which was characterized by its digital marketing and was growing rapidly. The channels of direct marketing offered a less expensive medium as compared to the traditional advertising mediums such as TV.

This industry also continued to grow at a rate higher than the growth rate of the US economy. The digital channel growth and modern forms of advertising expected that the industry would continue to grow at the rate of 3.2% in 2013 and beyond. Therefore, we can say that Bluntly Media is operating in an industry which has positive future prospects. Moreover, the historical performance of the company shows that it is a strong private company. This positive market outlook would also support the elevated valuation of Bluntly Media. Therefore, we can say that the current economic climate is favorable for such an acquisition.

‘Internal ‘size up’ Analysis

The internal analysis for Bluntly Media has been performed through the ratio analysis for its historical years from 2009 to 2012. The analysis for each category of the ratios is performed below:.................

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