Spyder Sports Case

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Financial Valuation of Spyder Active Sports Inc. April 27, 2011 Analysis By:
Sean Baeyens
Taylor Zuccolotto
Mengyu Zhu
Larry Hu
Mohamed Alloo

1.a) To value Spyder Active Sports Inc., we decided to use the WACC method since we can easily value its cost of assets with the data immediately available to us in the case. We first unlevered the beta’s of 7 comparable companies and took the average to get a comparable unlevered beta for Spyder (Exhibit 1). Since we are assuming Spyder is entirely equity financed, its unlevered asset beta is equal to the beta of its assets. We now have a rough estimate of Spyder’s asset beta, we can
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The current management team would get to keep their current positions. Strategies the financial buyer would most likely adopt in order to raise value of the company are cutting costs, selling off the assets and raising much leverage to take advantage of the lower cost of debt.
David Jacob should analyze the situation with different interests in mind. Since he was looking for an exit from this business that he built from perseverance and hard work, it would be to his benefit to obtain the maximum amount of money possible from the sale. This makes the strategic buyers more favorable. However, His sons who currently work for the company would probably lose their jobs. Finally, taking in consideration of his age of 70, which is an age where he would probably want to just enjoy his life as much as possible, we would say that he should choose to sell to the strategic buyer and take the higher premium and just leave the business completely.
If we were partners in CHB Capital Partners, we would advocate selling to the strategic buyer because we would receive a higher premium and return from this transaction. CHB has done a great job with Spyder as the company has experiences rapid growth and tremendous success that they should not wait longer to capitalize on the IRR. If this transaction took place, the people affected would be more than just the partners in CHB as they would

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