A global provider of web analytics software and services was purchased by a large private equity investor. Although the purchase price had been established, the new entity was capitalized with debt and three different types of equity securities, whose value had not been determined. We were engaged to advise on the appropriate capitalization of each security. The terms of each class of equity security changed as the structure of the transaction was finalized.
Using proprietary models developed in-house, we developed several iterations of the allocation of the capital of the company as the terms of each class of equity changed. Our final valuation of each equity security was reviewed and approved by the company’s Big 4 auditor.