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WorldLink Update January 2008. 1 World Link Deal Structure Considerations Headline Structure The “Pitch” to Toni The Implications for Sony Up to $18MM.

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Presentation on theme: "WorldLink Update January 2008. 1 World Link Deal Structure Considerations Headline Structure The “Pitch” to Toni The Implications for Sony Up to $18MM."— Presentation transcript:

1 WorldLink Update January 2008

2 1 World Link Deal Structure Considerations Headline Structure The “Pitch” to Toni The Implications for Sony Up to $18MM total consideration – $14MM cash at close for 100% of the Company – $2MM of earn-outs tied to performance of her “core business” – $2MM of earn-outs tied to growing revenue with clients we give her to manage (e.g., Tennis Channel) Sony is willing to pay up to $18MM for her company We will pay $14MM at close and bear all the risk if her business declines due to market forces The next $2MM should be easily attainable and entirely in her control, she just needs to hit forecasts The final $2MM is in our joint control. But if she demonstrates capacity to grow, it’s almost a windfall to her (we’re handing her live clients to manage) $14MM is a reasonable price in this market – Base case DCF supports a value of $20MM – Downside DCF supports $14MM even with business declining 3-5% each year – At 5x trailing EBITDA, we’re in-line with public ad agency comps (excluding any control premium) $16MM if she hits forecast is also a good price for us – DCF of her forecast values the company at $28MM $2MM potential earn-out on 3 rd party business we ask her to manage requires her to drive significant growth to fully earn-out – To fully earn, she needs to drive roughly $7MM of revenue growth each year ($7MM growth x 10% = $700K earn-out per year X 3 years = $2MM)

3 2 World Link Earn-out Structure (in addition to $14MM cash at close) Cash at Close Earn-out on Core Business Other Items to Note Up to $2MM structured as 50% of each dollar above 2008 EBITDA of $2.8MM up to a cap If WorldLink hits it’s forecast, the earn-out is almost fully paid – $500K potential in 2009 (50% of each dollar b/t $2.8MM and $3.8MM) (forecast: $3.7) – $500K potential in 2010 (50% of each dollar b/t $2.8MM and $3.8MM) (forecast: $4.1) – $1MM potential in 2011 (50% of each dollar b/t $2.8MM and $4.8MM) (forecast: $4.7) If we choose to have World Link manage a portion of our 3 rd party business (e.g., Tennis Channel) she receives 10% of growth in revenues over 2008 levels – Assuming a 30% margin; 10% of revenues is effectively a 33% profit share (on growth only) Giving clients to Toni to manage is entirely in Sony’s discrection Earn-out on SPT 3 rd Party Business Revenues from our existing 3 rd party business would be excluded from the “core business” EBITDA calculation If Toni is forced to hire new resources to service our existing 3 rd party business, she will want them excluded from her “core business” calculation. This will be difficult unless staff is directly tied to specific accounts


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