SPAC Seeks Target Company Valuation in Merger Consideration Transaction
SPAC Seeks Target Company Valuation in Merger Consideration Transaction
A special purpose acquisition company (SPAC) was contemplating entering into a Business Combination Agreement with a private biotechnology company working to develop psilocybin products, medical formulations and related protocols to treat mental health disorders in a clinical environment. The SPAC retained RNA to render an opinion as to whether the target company’s implied valuation in the transaction would be fair, from a financial point of view, to the SPAC.
RNA performed extensive due diligence, including conducting multiple interviews with the target company’s management team and assessing pricing/reimbursement issues.
Due to the particular circumstances, RNA valued the target company using the income approach by analyzing the company’s lead program for both its primary and secondary indication. In addition, RNA valued the target company using the market approach by considering private company financing transactions.
RNA presented its findings to the SPAC’s Board of Directors and rendered a written opinion which concluded that the target company’s implied valuation in the transaction was fair was fair, from a financial point of view, to the SPAC.
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