Chapter 8 - The valuation

MRI offered:
$460 million.
Prescott Power’s independent advisers estimated a standalone value between:
$510 million and $590 million,
depending on assumptions.
Ryan argued the lower purchase price reflected:
Debt assumption.
Integration risk.
Required capital expenditure.
Fair argument.
Then Melissa produced a second analysis placing fair value at:
$445 million.
Two valuations can differ honestly.
But Grant noticed something.
Several assumptions in Melissa’s model came from:
Operating forecasts that nobody at Prescott Power remembered providing.
He asked:
“Where did these numbers come from?”
Melissa answered:
“Management materials.”
Which management?
May you like
She would not say clearly.
That started the internal review.