Overview Case considerations Additional case information Key topics

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Overview Case considerations Additional case information Key topics 7/6/2019 Emdeon Inc. Overview Case considerations Additional case information Key topics 7/6/2019 Senior Seminar in Finance FNCE 4850 Senior Seminar

Senior Seminar in Finance 7/6/2019 Overview July, 2009 Marcus Gentles, investment bank analyst, must: 1) determine an issue price for the anticipated IPO of Emdeon (expected to raise $330M); 2) assess the major risk and opportunities associated with the issue. Spreadsheet available: Emdeon.xls 7/6/2019 Senior Seminar in Finance FNCE 4850 Senior Seminar

Senior Seminar in Finance Case considerations Quantitative analysis DCF of FCF (discounted by cost of equity) Determine proper discount rate Comparables analysis (multiples) Determine proper comps Determine appropriate multiples 7/6/2019 Senior Seminar in Finance

Senior Seminar in Finance Case considerations Apply appropriate discount for IPO issue: Assess current IPO market (exhibit 9 in spreadsheet) Results of marketing of issue (“roadshow”) Overall risks associated with issue 7/6/2019 Senior Seminar in Finance

Senior Seminar in Finance Case considerations What are the advantages and disadvantages of lower versus higher IPO pricing? What are the overall risks and opportunities associated with the company and its IPO issue? How should IPO price be set in light of these issues? 7/6/2019 Senior Seminar in Finance

Additional information Recent IPO market activity (see Exhibit 9) in spreadsheet Roadshow marketing results: issue is oversubscribed Estimated adjusted EPS for multiple analysis: $.48 - $.55 / per share Total shares outstanding upon IPO issue: 100 million 7/6/2019 Senior Seminar in Finance

Senior Seminar in Finance Key topics Valuation—DCF and multiples Cost of capital IPO pricing Assessment of investment risks and opportunities 7/6/2019 Senior Seminar in Finance

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