Exploring Exit Opportunity for a Portfolio Company

Our client a US-based family office, looking to exit one of its largest portfolio companies.
The client wanted JMI to analyze various strategic options and search for a potential buyer.

Conducted detailed research on company and valued the company using SOTP method and company comparable.
Valued 37% of investor’s equity value at $65M and also identified the realized gain of $61M during 19 yr holding period.
Assessed that the company has one of its best investment in portfolio with MoIC of 32.6x and IRR of 39.2%.
Based on analysis, JMI team identified that the size of market remains a constraint for further growth potential and company had reached its maturity in their strategic frames.
JMI recommended two options:

Options	Potential Actions	Pros	Cons
Option 1: STAY / SEEK GROWTH	Introduce Strategic Investor. Stay till IPO. Don’t expect dividends for the next few years.	Generate Liquidity for the business. New Capital to grow markets and products. Option for future listing.	Growth but dilution. Future Capital calls. Continued management time and bandwidth. Business downturn risk in saturated market. Opportunity Cost of Capital.
Option 2: EXIT / SEEK LIQUIDITY	Sell Control to large strategic investor. Retain small equity for future upside.	Generate Liquidity for a shareholder. Opportunity to deploy capital in a faster growing strategy.	Exit time may not yield peak price achievable.

JMI conducted research on sector to provide insights on sector trends and outlook.
JMI conducted SOTP valuation of company to get insights on return on invested capital.
JMI team recommended two options and potential actions to take based on selected option.
JMI assisted the client in their exit decision of the investment and found two potential buyer.