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Medium M&A Valuation Financial Analysis

Allsafe

#Insurance #Software #Analytics
ProHub Comment

This case tests valuation skills through building an income statement to EBIT, then applying a perpetuity formula with growth and discount rates to determine firm value. The key insight is recognizing that no strategic synergies exist between Allsafe (insurance) and MarketMaven (marketing analytics SaaS), making the $1.1B offer attractive at a $200M premium above the calculated $900M NPV. The candidate must move from strategic thinking to financial modeling to reach a data-driven conclusion.

Estimated Time 15 minutes
Difficulty Medium
Source ROSS
50 / 100
Our client, Allsafe, a large insurance company, provides home, auto, renter’s and life insurance. Recently, Allsafe acquired a technology firm specializing in data analytics software. As part of the acquisition, Allsafe also acquired a smaller subsidiary, MarketMaven, a marketing analytics software-as-a-service firm. Our firm has been engaged a few years post-acquisition and Allsafe would like to know how to proceed with MarketMaven – AllSafe already has an acquisition offer of $1.1B for MarketMaven and the choice is between taking the deal (i.e. divesting MarketMaven) or integrating it with AllSafe.

Clarifying Information

  1. Allsafe is a large insurance conglomerate that employs an outside marketing agency for all marketing services
  2. MarketMaven is small firm, but has experienced growth over the last 5 years.