Who uses HOLT? Investment bankers
Credit Suisse investment bankers, along with a specialized corporate strategy and valuation team, use the HOLT platform to provide corporate clients with a quantitative perspective on how corporate actions affect shareholder value, thereby enhancing their ability to make better strategic decisions. Our bankers also use the framework to provide corporations with a perspective on how money managers view the company through HOLT, and to effectively communicate performance and strategy to the buy-side community where HOLT is broadly employed to make buy-sell decisions.
Maximizing value in an IPO
Renewable energy is an early life-cycle industry with a complex and diverse set of operating drivers. Our client, preparing for an IPO, was in need of a framework that would help distinguish and quantify the different sources of value in the renewable energy industry.
Growth, margins, tax credits and competitive advantage period each have a unique meaning in the space, and can all have a significant impact on the perceived value of the business. Traditional multiples or terminal value DCF models were useful in the IPO process but not flexible enough to provide a complete picture. HOLT provided the ability to quantify and explain each of these long-term value drivers deemed important by our client who wanted to achieve a premium valuation for the offering.
Valuation scenarios provided by HOLT were a key part of the client's road show presentations, which helped to educate investors about the company's unique risk profile. The company built a solid base of support ahead of the offering.
Helping a pharmaceutical company forecast the share price impact of a successful drug trial
Management of a pharmaceutical company was seeking to understand the market's view of their stock and quantify the potential share price upside warranted by a drug's potential approval.
Credit Suisse's specialized corporate strategy team used the HOLT framework to provide management with an investor-based perspective on performance expectations embedded in the current share price compared to the warranted share price assuming positive Phase III results. Additionally, this team assisted management in interpreting movements in stock price and in guiding investor views.
The company completed clinical trials and received approval to begin marketing the drug. When the company announced this news, it was able to communicate with shareholders effectively and realistically about the impact of the new drug on its operations.
Proving the value of an M&A bid target to the acquirer
After receiving an unsolicited takeover approach, a client of Credit Suisse needed a fast, thorough assessment of the situation so it could enter negotiations with the maximum possible advantage.
Our client was a key player in a consolidating industry. For the acquirer, the company fit their desired profile of a high-return business with a growth platform and sustainable operating performance. Using the HOLT framework, we quantified the expectations embedded in our client's share price and highlighted the growth and profitability improvements implied by the offer price. We then valued the management plan and compared it with the acquisition scenario. Our M&A evaluation was not focused on accounting EPS accretion, but on whether the acquisition premium would deliver more value to shareholders than the stand-alone strategy.
Significant merger-synergies were identified, and helped convince the acquirer to bid an 11.5x EBITDA multiple on a $2 billion offer.