2014 - William Blair Case Competition

Skipper’s Sporting Goods
Sam Harrison| Michael Loffredo | Boris Udovicic | Joe Wavering
William Blair Case Competition 2014

Executive Summary
Company & Industry Overview
Valuation
Potential Buyer Universe
Recommendation
3
5
11
20
23
Appendix 25

3
111
Executive Summary Company & Industry
Overview
Valuation Potential Buyer
Universe
Recommendation
Executive Summary

4
111
Overview
Universe
Recommendation
1000 1200 1400 1600 1800 2000 2200
Leverged Buyout
Initial Public Offering
DCF - Perpetuity
DCF - Exit Multiple
Precedent Transactions
Public Comparables
$1,400 mm – $1,600 mm
Executive Summary
Project Overview & Analysis Diversified Offerings
Valuation Summary
 We are pleased to present to the board on a potential transaction
for Skipper’s Sporting Goods
 Skip’s is well positioned with leading brands in the sporting
goods manufacturing industry
 Slow and steady industry growth
 Opportunities for future growth in untapped channels and product
lines
 Mass, club, medical & physical therapy, and specialty
retail
 Water sports, wrestling, and basketball equipment
Sources: Case Materials, Team Projections
Soccer
Baseba
ll
Positioned For Growth
2015 EV/EBITDA 7.1x 8.6x 10.0x 11.4x 12.8x 14.3x
15.7x
10.0x – 11.4x Forward EV/EBITDA
Lacross
e
Possible
Segment
sPotential
Products
Footbal
l
Enterprise Value mm

5
111
Overview
Universe
Recommendation
Company & Industry Overview

6
111
Overview
Universe
Recommendation
Company Overview
Description
 Skipper’s Sporting Goods functions in the sporting goods
manufacturing industry
 Offers premium performance and protective gear in 4
sports
 Core: Football, Baseball
 Growth: Soccer, Lacrosse
 Long-standing relationship with customers due to industry
knowledge and superior products
 Distribution network similar to a larger company, yet personal,
long-standing relationships with suppliers
Top Line to Bottom Line
Segmented Revenue 2014E EBITDA Margin
0
400
800
1,200
1,600
2012 2014E 2016E 2018E 2020E
$ mm
Lacrosse
Soccer
Baseball
Football
Sources: Case Materials, Team Projections
0.0%
5.0%
10.0%
15.0%
20.0%
0
100
200
300
2012 2014E 2016E 2018E 2020E
RevenueGrowth
EBITDA($mm)
Revenue Growth EBITDA
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
PSG ELY ESCA JAH AGPDY Mizuno Skip's
Avg.

7
111
Overview
Universe
Recommendation
Product Offerings
Core Segments
 Football
 Leading helmet manufacturer
 Opportunity for growth as a result of
increased concussion awareness
 Baseball
 Solid position in industry
 Producer of helmets, cleats, gloves, & bats
Secondary Divisions
 Soccer
 Initiated new segment in 2009
 Attempted to acquire strategic partner in
2011
 Lacrosse
 Purchased two manufacturing companies
in 2010
 Producer of helmets, sticks, & elbow pads
 Untapped products in mouth guards and
compression gear
Business Approach
Strong
research &
development
team
Loyal and
responsive
suppliers
Excellent
distribution
network
New
products
offered
Sold to
individual
athletes and
teams
Professional
feedback
from athletes
and loyal
retailers
Innovation
Sources: Case Materials

8
111
Overview
Universe
Recommendation
Industry Breakdown
Skip’s Positioning Slow but Steady
Trade Weighted Index Industry Outlook
 Foreign exporters pose a serious threat to domestic profitability
 Future trend of trade index predicting a stronger dollar will fuel
imports
 Skipper’s premium brands are positioned to retain market share
amidst a flooding of cheap, foreign products
 Loyal, long-standing customers form a base to weather any economic
storm
 Skippers’ long standing relationships with suppliers enable them
to achieve gross margins close to 50% beating industry average
of 40%
 Industry leading margins ensure stability during economic swings
 Skip’s has been following the industry trend of locating
manufacturing capacity close to end customers
 Allows for quick product adaptation and low transportation costs
 The industry is consolidating due to a competitive operating
environment
 Will lead to a decrease in the number of sporting goods
manufacturers
 A steady rise in sports participation along with an increase in
per capita disposable income will increase demand for premium
sporting goods products
 Wage increases in Asia, coupled with logistics costs, are
bringing manufacturing jobs back to North America
Sources: Ibis World
8,000
8,500
9,000
9,500
10,000
17.8
18.2
18.6
19.0
19.4
2011 2013 2015E 2017E
Revenue($mm)
%SportsParticipation
Revenue (In Millions) % Sports Participation
70
80
90
100
2006 2008 2010 2012 2014 2016E 2018E 2020E

9
111
Overview
Universe
Recommendation
Industry Breakdown
Competitive Landscape
Growth Variance
 The Athletic and Sporting Goods Manufacturing industry is
highly fragmented resulting in a high level of competition
 Vertically-integrated firms dominate industry by using retail
establishments to modify prices
 More difficult for firms that depend on supply-side contracts
 Overall manufacturer concentration is relatively low with the four
top players capturing only 14% of the industry
 Leads to M&A activity where Skip’s can capitalize with strong cash
flow and relatively low debt
 Most activity are niche players with transaction values under $50
million
Industry Analysis
•Companies like Nike and Adidas have been
able to vertically integrate their operations
•Allows for easier distribution and pricing
power
Vertically –
Integrated
Blue Chips
•Activity by strategic acquirers have resulted
in very few pure play alternatives
•Performance Sports Group operates in 3 out
of the 4 markets Skip’s is in.
Pure Play
•Companies like Jarden hold portfolios that
incorporate sporting goods manufacturers
•Management team and company name kept
intact for maximum return to shareholders
Holding
Companies
•Black Diamond and Callaway are focused on
a specific sport
•Have solid market positions, yet are
obstructed by undercutting competitors
Niche
Players
= $3 bn.
Sources: Bloomberg, Capital IQ
(5.0%)
0.0%
5.0%
10.0%
15.0%
20.0%
0.0% 5.0% 10.0% 15.0% 20.0%
RevenueCAGR2012-2016E
2014E EBITDA Margin
Performance
Sports Group Ltd.
Callaway Golf
Company
Escalade Inc.
Jarden Corp.
Amer Sports Oyj
Skipper's Sporting
Goods
Mizuno Corp.

 At risk for substitute products
that can under-cut prices
 Increasing regulations on sports
safety equipment
 Expansion of Lacrosse and
Soccer’s popularity
 In a declining industry that is slow at adapting
and many smaller firms are experiencing
consolidation
 Not much cash on hand for future acquisitions
 Substantial amounts of depreciation for a
growth company that is relatively young
10
11
Overview
Universe
Recommendation
W
TO
 Diversified customer base provides revenue
stability
 Significant room for growth in current and
untapped products
 Premium products appeal to multiple consumer
targets
 Strong relationships with a diverse vendor base
 Experienced management team
 Mixed product lines which appeal to
multiple subsets of athletes
S
 Larger players have pricing power and
distribution advantages over Skip’s
 Utilizing SkipsSportsGoods.com to reach
consumers directly and drive margins
 Untapped channels in specialty physical
therapy and retail stores
 Revenue is dependent on aging
industries which can hinder
overall growth
 At risk for higher wages in China, where
60% of manufacturing costs exist
 Exposed to potential currency exchange rates that
can negatively impact net income
SWOT Analysis
Sources: Case Materials, Ibis World

11
11
Overview
Universe
Recommendation
Valuation

12
11
Overview
Universe
Recommendation
Transaction Options
Option Comparison
Skipper’s Goals
Maximize
Shareholder Value
Management – Post
Transaction
Capital for Growth
Strategic Acquisition
Sponsor Acquisition
IPO
Debt Recapitalization
Status Quo

13
11
Overview
Universe
Recommendation
Option Breakdown
Strategic Acquisition
 Pros
 Maximizes shareholder value as strategic buyers are willing
to pay more for potential synergies
 More likely to pursue growth opportunities as strategic
acquirers will not divert cash flow to pay off debt
 Cons
 Strategic acquirer less likely to retain current management
team than a sponsor acquisition
Sponsor Acquisition
 Pros
 Probable for current management to be retained but new
shareholders may vote to replace them
 IPO process will raise capital for Skip’s to pursue growth
opportunities they cannot currently afford
 Cons
 Shareholder value is unlikely to be maximized because of
IPO discount and lack of control premium
Debt Recapitalization
 Pros
 Current management team likely to be retained due to
industry expertise and company performance
 Cons
 Investment based transaction will likely lead to lower
shareholder value
 Excess cash flow will be diverted to pay down debt rather
than grow Skip’s operating segments
 Pros
 Current management structure will remain as there is no
transfer of ownership
 Capital acquired for growth will be high due to the
introduction of a financially strong partner to fund future
growth
 Cons
 Difficult to determine an exact number for shareholder
value as this is not a complete liquidation event

14
11
Overview
Universe
Recommendation
Valuation Overview
Implied Valuation Ranges
Sources: Team Projections
1000 1200 1400 1600 1800 2000 2200
Leverged Buyout
DCF - Perpetuity
DCF - Exit Multiple
Public Comparables
2014 EV/EBITDA 8.0x 9.6x 11.2x 12.8x 14.4x 15.9x
17.5x2015 EV/EBITDA 7.1x 8.6x 10.0x 11.4x 12.8x 14.3x
15.7x
EV/LTM EBITDA 13.7x – 15.7x
EV/EBITDA 10.3x – 12.3x
Exit Multiple 9.5x – 10.5x
Perpetuity Growth 1.5% - 2.5%
EV/EBITDA 13.7x – 15.7x
Entry Multiple 11.0x
5.5x Leverage Ratio
Comparables as of 2015
Forward Multiples
Enterprise Value mm
$1,400 mm – $1,600 mm
10.0x – 11.4x Forward EV/EBITDA

15
11
Overview
Universe
Recommendation
Public Comparables
Valuation RationaleOutputs
Public Comparables
Analysis
 Public Comparables were chosen based on:
 Industry
 Market Capitalization
 Capital Structure
 Resulted in an Enterprise Valuation between $1,716.2 and
$1,967.0
In Millions of US $ except Per Share
data
Company Name
Ticker &
Price
% of 52 Enterprise Market LTM
LTM
EBITDA
Enterprise Value
Exchange Week High Value Cap EBITDA Revenue Margin
LTM
EBITDA
LTM
Revenue
2014E
EBITDA
2015E
EBITDA
Performance Sports Group Ltd. PSG US $16.86 86.7% 1,135.7 742.3 36.4 489.3 7.4% 31.2x 2.3x 27.6x 11.0x
Callaway Golf Company ELY US $7.90 76.3% 729.1 612.8 46.7 879.5 5.3% 15.6x 0.8x 14.3x 12.0x
Escalade Inc. ESCA US $11.41 66.3% 171.5 158.7 18.2 156.9 11.6% 9.4x 1.1x 8.6x 7.5x
Nautilus Inc. NLS US $14.73 95.1% 387.2 461.2 26.4 256.6 9.8% 14.7x 1.5x 12.6x 10.6x
Jarden Corp. JAH US $65.38 99.0% 12,775.0 8,385.1 816.8 8,064.7 10.1% 15.6x 1.6x 11.3x 10.4x
Amer Sports AGPDY US $9.71 86.6% 2,966.5 2,301.6 270.1 2,959.4 9.1% 11.0x 1.0x 15.8x 12.0x
Mizuno Corporation 8022 JP ¥522.00 82.1% 799.1 636.8 82.3 1,822.2 4.5% 9.7x 0.4x 9.0x 9.2x
Skipper's Sporting Goods 1,500.0 1,503.5 125.4 724.1 17.3% 12.0x 2.1x 12.0x 10.7x
High $65.38 99.0% 12,775.0 8,385.1 816.8 8,064.7 11.6% 31.2x 2.3x 27.6x 12.0x
3rd Quartile $16.33 90.9% 2,051.1 1,522.0 176.2 2,390.8 10.0% 15.6x 1.5x 15.1x 11.5x
Medium $13.07 86.6% 799.1 636.8 46.7 879.5 9.1% 14.7x 1.1x 12.6x 10.6x
Mean $21.00 84.6% 2,709.1 1,899.8 185.3 2,089.8 8.3% 15.3x 1.3x 14.2x 10.4x
1st Quartile $10.14 79.2% 558.2 537.0 31.4 373.0 6.4% 10.3x 0.9x 10.2x 9.8x
Low $7.90 66.3% 171.5 158.7 18.2 156.9 4.5% 9.4x 0.4x 8.6x 7.5x
Implied Valuation
Enterprise Value / EBITDA 13.7x
----------------
- 15.7x
Enterprise Value 1,716.2
----------------
- 1,967.0

16
11
Overview
Universe
Recommendation
Valuation RationaleOutputs
In Millions of US $ except Per Share
data
Target Company Acquirer Transaction Type Transaction Date Transaction Value Premium
Enterprise Value
LTM Revenue
LTM
EBIT
LTM
EBITDA
Cascade Helmets Holdings Inc. Performance Sports Group Ltd. Strategic Takeover 13-Jun-12 81.9 N/A 3.7x 15.2x 14.3x
The Warnaco Group Inc. PVH Corp. Strategic Takeover 14-Feb-13 2,823.8 33.6% 1.2x 19.3x 11.3x
Adams Golf LLC Adidas AG Strategic Takeover 1-Jun-12 71.9 16.1% 0.8x 10.7x 9.8x
CamelBak Products LLC Compass Diversified Holdings Sponsor Takeover 25-Aug-11 336.3 N/A 2.7x 15.5x 12.7x
Bushnell Inc. MidOcean Partners Sponsor Takeover 5-Sep-13 985.0 N/A 1.8x N/A 10.6x
High 33.6% 3.7x 19.3x 14.3x
3rd Quartile 29.2% 2.7x 16.5x 12.7x
Median 24.9% 1.8x 15.4x 11.3x
Mean 24.9% 2.0x 15.2x 11.7x
1st Quartile 20.5% 1.2x 14.1x 10.6x
Low 16.1% 0.8x 10.7x 9.8x
 Precedent Transactions were chosen based on:
 Industry
 Transaction Value
 Transaction Type
 Resulted in an Enterprise Valuation between $1,289.1 and
$1,539.9
Implied Valuation
Enterprise Value / EBITDA 10.3x
----------------
- 12.3x
Enterprise Value 1,289.1
----------------
- 1,539.9

17
11
Overview
Universe
Recommendation
Discounted Cash Flow
Discount Periods
Sensitivity of Exit Multiple Sensitivity of Perpetuity Growth
Historical Estimated Projected
2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
EBITDA 123.1 125.4 140.2 160.1 178.1 196.4 214.3 231.2 246.1
Less: D&A 20.0 21.7 24.0 26.8 29.9 32.9 35.9 38.7 41.3
EBIT 103.1 103.7 116.2 133.3 148.3 163.5 178.4 192.4 204.9
Taxes 37.1 37.3 41.8 48.0 53.4 58.9 64.2 69.3 73.8
NOPAT 66.0 66.4 74.4 85.3 94.9 104.6 114.2 123.2 131.1
Add: D&A 20.0 21.7 24.0 26.8 29.9 32.9 35.9 38.7 41.3
Less: CapEx 17.5 18.8 18.0 18.0 29.9 38.4 41.9 45.2 48.1
Less: Changes in NWC 0.0 2.0 (5.0) (7.3) (8.3) (8.1) (7.9) (7.1) (7.0)
FCF 68.5 67.3 85.4 101.4 103.1 107.2 116.1 123.8 131.2
PV of FCF 78.7 86.2 80.8 77.4 77.3 75.9 74.2
Exit Multiple
1,942.9 8.5x 9.0x 9.5x 10.0x 10.5x 11.0x 11.5x
WACC
7.0% 1,894.2 1,971.4 2,048.5 2,125.6 2,202.7 2,279.8 2,356.9
7.5% 1,841.4 1,916.0 1,990.6 2,065.3 2,139.9 2,214.5 2,289.2
8.0% 1,790.4 1,862.6 1,934.8 2,007.1 2,079.3 2,151.6 2,223.8
8.5% 1,741.1 1,811.0 1,881.0 1,950.9 2,020.9 2,090.8 2,160.8
9.0% 1,693.5 1,761.2 1,829.0 1,896.7 1,964.4 2,032.2 2,099.9
9.5% 1,647.6 1,713.2 1,778.8 1,844.3 1,909.9 1,975.5 2,041.1
10.0% 1,603.2 1,666.7 1,730.2 1,793.8 1,857.3 1,920.8 1,984.4
Perpetuity
1,719.3 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%WACC
7.0% 1,851.2 1,964.2 2,097.9 2,258.3 2,454.6 2,700.2 3,016.3
7.5% 1,711.8 1,805.9 1,915.8 2,045.7 2,201.7 2,392.6 2,631.4
8.0% 1,591.1 1,670.4 1,761.9 1,868.8 1,995.2 2,146.9 2,332.5
8.5% 1,485.7 1,553.1 1,630.3 1,719.3 1,823.3 1,946.2 2,093.8
9.0% 1,392.8 1,450.7 1,516.3 1,591.4 1,678.0 1,779.1 1,898.7
9.5% 1,310.4 1,360.5 1,416.8 1,480.7 1,553.7 1,637.9 1,736.3
10.0% 1,236.8 1,280.4 1,329.1 1,383.9 1,446.0 1,517.1 1,599.1

18
11
Overview
Universe
Recommendation
IPO Activity IPO Valuation
Recent IPO in Market
 Performance Sports Group Ltd. (PSG) offered 7 million shares to
the public in June
 Already was public in Canada (TSX)
 Additional capital was used to deleverage and repay loan facilities in
recent transactions
 Changed name from Bauer Performance Sports Ltd. to better
reflect its recent strategic acquisitions and expansion into higher
performance sports
 Initially priced at $15.50
 1 day jump of 3.23%
 1 week jump of 9.10%
Valuation Rationale
 IPO market has recovered since the financial crisis
 An IPO would open up Skipper’s Sporting Goods to additional
capital that would fund additional growth or potential
acquisitions
 IPO discount would not maximize shareholder value
 Equity valuations are at all time highs
 Analysis of Skip’s in an IPO situation resulted in an implied
Enterprise Valuation of:
 $1,373.7 --- $1,574.3
0
10
20
30
40
50
0
50
100
150
200
250
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
DollarVolume(in$billions)
#ofIPOs
# of IPOs Dollar volume (in $billions)
Sources: EY Global IPO Trends Report, Case Material
2014 IPO Valuation
EBITDA 125.4 125.4 125.4
EV/EBITDA Multiple 13.7x 14.7x 15.7x
Target Post-Money Seasoned Valuation 1,721.5 1,841.1 1,972.3
Less: IPO Discount 14.0% 14.0% 14.0%
Less: Trasaction Fees 6.0% 6.0% 6.0%
Post-Money IPO Equity Valuation 1,377.2 1,472.9 1,577.8
Implied Enterprise Valuation 1,373.7 1,469.4 1,574.3

19
11
Overview
Universe
Recommendation
Leveraged Buyout Analysis
Overview
Sensitivity of Leverage Ratio Sensitivity of Exit Multiple
Deal Assumptions
 Strong, consistent cash flows as well as an experienced
management team make Skipper’s a good target for a private
equity acquisition
 Transaction assumptions used to derive a valuation were:
 Entry and Exit Multiple of 11.0x
 Investment time horizon of 5 years
 5.5x leverage ratio comprised of:
 4.0x Term Loan A
 1.5x Subordinated Notes
 This valuation method led to an implied valuation of:
 $1,310.4 – $1,448.4
Sources: Pepperdine Private Capital Report, Team Pro
Leverage Ratio
25.1% 4.0x 4.5x 5.0x 5.5x 6.0x 6.5x 7.0x
Purchase
Multiple
9.5x 23.3% 24.9% 26.8% 29.0% 31.6% 34.7% 38.5%
10.0x 22.5% 23.9% 25.6% 27.5% 29.7% 32.3% 35.4%
10.5x 21.7% 23.0% 24.5% 26.2% 28.1% 30.4% 33.0%
11.0x 21.1% 22.3% 23.6% 25.1% 26.8% 28.8% 31.0%
11.5x 20.5% 21.6% 22.8% 24.2% 25.7% 27.4% 29.4%
12.0x 20.0% 21.0% 22.2% 23.4% 24.8% 26.3% 28.0%
12.5x 19.6% 20.5% 21.5% 22.7% 23.9% 25.3% 26.9%
Exit Multiple
25.1% 9.5x 10.0x 10.5x 11.0x 11.5x 12.0x 12.5xPurchase
Multiple 9.5x 29.0% 30.4% 31.8% 33.1% 34.4% 35.6% 36.8%
10.0x 26.1% 27.5% 28.8% 30.1% 31.4% 32.6% 33.7%
10.5x 23.5% 24.9% 26.2% 27.5% 28.7% 29.9% 31.0%
11.0x 21.2% 22.6% 23.9% 25.1% 26.3% 27.5% 28.6%
11.5x 19.2% 20.5% 21.8% 23.0% 24.2% 25.3% 26.4%
12.0x 17.3% 18.6% 19.9% 21.1% 22.3% 23.4% 24.5%
12.5x 15.6% 16.9% 18.2% 19.4% 20.5% 21.6% 22.7%
Transaction Summary
2014 EBITDA 125.4 Equity Value 1,382.9
Entry Multiple 11.0x Enterprise Value 1,379.4
Enterprise Value 1,379.4 Exit Multiple 11.0x
Leverage Ratio 5.5x Debt Used 689.7
Minimum Cash 5.0
Sources Uses
Amount % of Total Amount % of Total
Excess Cash 24.0 1.7% Equity Value of Company 1,382.9 96.8%
Total Debt 689.7 48.3% Repay Existing Debt 25.5 1.8%
Sponsor Equity 715.4 50.1% Fee Total 20.7 1.4%
Total Sources 1,429.1 100.0% Total Uses 1,429.1 100.0%
Debt Assumptions
Scenario: 2
% of Total Ratio Years Amount
Leverage Ratio 5.5x Debt Assumed 689.7
Revolver 0.0% 0.0x Revolver N/A 0.0
Term Loan A 72.7% 4.0x Term Loan A 10 501.6
Subordinated Note 27.3% 1.5x Subordinated Note 10 188.1
Check 100.0% 5.5x Check 689.7
Interest Rates Principal Repayment Rates (per Annum)
Revolver L+ 200 bps Revolver N/A
Term Loan A L+ 380 bps Term Loan A 5.0%
Subordinated Note 6.1% Subordinated Note 5.0%

20
11
Overview
Universe
Recommendation
Potential Buyer Universe

21
11
Overview
Universe
Recommendation
Potential Strategic Buyers
 Strategic acquisition to expand umbrella of product offerings
 Likely to keep current management in place for their industry
experience
 Product offering expansion through new football protective
offerings
 Large balance sheet to support an acquisition (low debt and
growing cash)
 Has previously pursued large acquisitions such as a $1.2 billion
acquisition of Titleist
 Acquisition of Skipper’s would add four new product lines to the
company’s portfolio
 Currently offering products in many of the same product categories
as Skipper’s
 Focused on expanding market share and pursuing strategic
acquisitions
 Largest British sporting goods retailer and manufacturer with
some brands in the U.S.
 Expansion of American product offerings to compliment Dunlop
racket and cycling
Sources: Company Websites, Bloomberg
Synergie
s
Fit
Ability
to Pay
Mgt.
Retentio
n

22
11
Overview
Universe
Recommendation
KKR
Berkshire
Hathaway
Carlyle Group
Potential Financial Sponsors
 Large fund with the capability to invest up to $2 billion in a deal
 Currently invested in consumer product manufacturing and distribution companies
 Past acquisitions of strong companies with leading brands and well capitalized
 Currently invested in Russell Brands which manufactures American sports equipment
 Worked with existing management in Xtep acquisition to ramp-up company growth
 Currently invested in Xtep which is a Chinese sportswear company
 Extending into the sporting goods manufacturing
 Currently invested in Academy Sports + Outdoors which is a premier sports retailer
 Actively pursuing deals and has enough capital to fund a buyout of Skip’s
 Have previously held many consumer product manufacturing companies such as
Rockshox Inc.
Sources: Company Websites

23
11
Overview
Universe
Recommendation
Recommendation

24
1
Overview
Universe
Recommendation
Chose comparable
companies based
on business model
and size
Resulted in a
14.7x
EV/EBITDA
multiple leading to
a valuation of
$1,843.4
Prescedents were
chosen from
transactions that
involved target
companies with
similar size,
industry, and date
Analysis resulted
in a lower multiple
for a financial
sponsor vs. a
strategic takeover
Good fit in many
PE portfolios
Potential for
synergies with
strategic buyers
Dependable cash
flows provide
great flexibility for
deal structure
Strong
management team
to lead company
after acquisition
Due to aggressive
growth, our DCF
valuation implied
Skip’s was worth a
premium
compared to other
valuations
Skip’s is able to
return much of its
income to
investors through
free cash flows
Provides Skip’s
with additional
capital for growth
into additional
products and
segments
Resulted in a
valuation similar
to the one derived
from LBO analysis
Comparables Precedents
Sale of Company
Discounted CF IPO
Implied Enterprise Value of
$1,400 mm – $1,600 mm
10.0x – 11.4x Forward
EV/EBITDA
Recommendation
Recommendation: Sale of
Skipper’s Sporting Goods
1) Strategic
acquisition
2) Sponsor acquisition

26
Revenue Projection Model
Football
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Level of Participation 7,816 7,243 6,850 6,448 6,220 5,875 5,579 5,326 5,111 4,930 4,780 4,658 4,563 4,493
% Change in Participation (7.3%) (5.4%) (5.9%) (3.5%) (5.5%) (5.0%) (4.5%) (4.0%) (3.5%) (3.0%) (2.5%) (2.0%) (1.5%)
% Change in Relative Market Share 6.4% (6.2%) 4.8% 5.8% 5.5% 4.5% 3.5% 2.5% 1.5%
Inflation Rate 1.5% 2.2% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Historical Revenue 275.5 281.0 255.7 260.8 270.0 280.3 289.6 298.0 305.2 311.1
Revenue Growth Rate 2.0% (9.0%) 2.0% 3.5% 3.8% 3.3% 2.9% 2.4% 1.9%
Baseball
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
% Change in Relative Market Share 6.2% 1.9% 7.6% 7.7% 7.0% 6.0% 5.0% 4.0% 3.0%
Inflation Rate 1.5% 2.2% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Revenue Growth Rate 3.0% (0.5%) 5.0% 5.0% 4.4% 3.4% 2.4% 1.4% 0.5%
Soccer
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Inflation Rate 1.5% 2.2% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Revenue Growth Rate 8.0% 12.0% 16.0% 22.0% 19.1% 17.3% 15.5% 13.7% 11.9%
Lacrosse
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
% Change in Participation 6.4% 22.5% 5.5% 7.1% 10.4% 9.4% 8.4% 7.4% 6.4% 5.4% 4.4% 3.4% 2.4%
Inflation Rate 1.5% 2.2% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Revenue Growth Rate 21.6% 23.0% 32.9% 25.1% 21.5% 18.2% 15.0% 11.7% 8.6%
Overall
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Sum Of Revenues 676.7 713.8 724.1 799.4 894.7 995.1 1,097.2 1,197.4 1,291.5 1,375.1
Overall Revenue Growth Rate 5.5% 1.4% 10.4% 11.9% 11.2% 10.3% 9.1% 7.9% 6.5%
Sources: SFIA Industry Report, Team Projections

27
WACC Calculations
Skipper's Capital Structure
Unlevered Beta 0.69
Equity 93.3
Debt 25.5
Tax Rate 36.0%
Levered Beta 0.81
 Cost of Equity
 Beta was determined by unlevering
comparable’s beta, then relevering based on
Skip’s capital structure
 Size Premium is added because the size of
Skip’s can influence how funding is raised
 Cost of Debt
 Calculated from a subset of our
Comparables Analysis
Company
Levered
Beta Equity Debt Tax Rate
Unlevered
Beta
Performance Sports Group
Ltd. 0.55 757.0 420.0
20.1%
0.38
Callaway Golf Company 0.60 646.3 108.2 35.7% 0.54
Escalade Inc. 0.12 226.6 13.9 35.5% 0.11
Nautilus Inc. 1.54 346.9 0.0 25.4% 1.54
Jarden Corp. 1.22 7,706.1 5,096.2 44.0% 0.89
WACC Calculations
Target Capital Structure
Debt 21.5%
Equity 78.5%
Beta 0.8
Country Risk Premium 7.5%
Risk Free Rate 2.3%
Size Premium 2.0%
Cost of Equity 10.4%
Pretax Cost of Debt 2.5%
Cost of Debt 1.6%
WACC 8.5%

28
Pro Forma Income Statement
Income Statement
Historical
Estimate
d Projected
2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Total Revenue $676.7 $713.8 $724.1 $799.5 $894.7 $995.1 $1,097.2 $1,197.4 $1,291.5 $1,375.1
Football 275.5 281.0 255.7 260.8 270.0 280.3 289.6 298.0 305.2 311.1
Baseball 200.3 206.3 205.3 215.5 226.3 236.2 244.1 250.0 253.6 254.7
Soccer 130.4 140.8 157.7 183.0 223.2 265.8 311.8 360.1 409.5 458.3
Lacrosse 70.5 85.7 105.4 140.1 175.2 212.9 251.6 289.3 323.2 351.0
Cost of Goods Sold 473.7 489.9 513.4 572.7 640.9 712.5 785.6 857.3 924.7 984.6
Manufacturing Costs (incl. Transportation & Labor) 338.4 351.9 371.2 407.7 456.3 507.5 559.6 610.7 658.7 701.3
Purchase of Supplies 135.3 138.0 142.2 165.0 184.6 205.0 226.0 246.7 266.1 283.3
Gross Profit 203.0 223.9 210.7 226.8 253.8 282.6 311.6 340.1 366.8 390.5
SG&A 101.5 120.8 107.0 110.5 120.5 134.3 148.1 161.7 174.4 185.6
EBIT 101.5 103.1 103.7 116.3 133.3 148.3 163.5 178.4 192.4 204.9
Interest Expense 0.0 0.0 1.3 1.2 1.2 1.1 1.1 1.0 1.0 0.9
Tax Provision 36.5 37.1 37.3 41.9 48.0 53.4 58.9 64.2 69.3 73.8
Net Income $65.0 $66.0 $65.1 $73.2 $84.1 $93.8 $103.6 $113.2 $122.2 $130.2
Capital Expenditures 15.0 17.5 18.8 18.0 18.0 29.9 38.4 41.9 45.2 48.1
Depreciation & Amortization 20.3 20.0 21.7 24.0 26.8 29.9 32.9 35.9 38.7 41.3
Adjusted EBITDA $121.8 $123.1 $125.4 $140.2 $160.1 $178.1 $196.4 $214.3 $231.2 $246.1

29
Pro Forma Balance Sheet
Balance Sheet
Estimate
d Projected
Assets 3Q13 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Cash 10.0 29.0 101.9 186.3 270.7 359.6 457.8 565.5 680.9
Accounts Receivable, Net 155.8 160.7 177.4 198.0 220.8 243.5 265.7 285.8 305.2
Inventory 69.9 71.7 80.0 89.3 99.6 109.8 119.8 128.9 137.6
Deferred Income Taxes 1.2 1.2 1.3 1.5 1.7 1.9 2.1 2.2 2.4
Other Current Assets 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6
Total Current Assets 241.5 267.2 365.3 479.8 597.4 719.3 850.0 987.0 1,130.6
Plant, Property, & Equipment, Net 42.0 41.3 35.3 26.5 26.5 32.0 37.9 44.4 51.3
Intangible Assets, Net 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8
Goodwill 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0
Other Non-Current Assets 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Total Assets 304.5 329.6 421.6 527.3 644.9 772.4 909.0 1,052.5 1,203.0
Liabilities & Stockholders' Equity
Accounts Payable 143.2 151.9 169.5 189.1 210.8 232.4 253.7 272.9 291.3
Accrued Liabilities 12.6 12.6 14.1 15.7 17.5 19.3 21.0 22.7 24.2
Deferred Revenue 11.0 11.0 12.1 13.6 15.1 16.7 18.2 19.6 20.9
Total Current Liabilities 166.8 175.5 195.7 218.4 243.4 268.4 292.9 315.2 336.4
Deferred Income Taxes 30.5 30.5 30.5 30.5 30.5 30.5 30.5 30.5 30.5
Long-Term Debt 25.5 25.5 24.2 23.0 21.9 20.8 19.7 18.7 17.8
Other Long-Term Liabilities 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7
Total Liabilities 227.5 236.2 255.1 276.7 300.5 324.4 347.8 369.1 389.4
Total Stockholders' Equity 77.0 93.3 166.5 250.6 344.4 447.9 561.1 683.3 813.5
Total Liabilities & Stockholders' Equity 304.5 329.5 421.5 527.2 644.8 772.3 908.9 1,052.4 1,202.9
Check 0 0 0 0 0 0 0 0 0

30
Pro Forma Cash Flow Statement
Cash Flow Statement
Estimate
d Projected
3Q14 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Cash from Operations:
Net Income $16.3 $73.2 $84.1 $93.8 $103.6 $113.2 $122.2 $130.2
Depreciation & Amortization 5.4 24.0 26.8 29.9 32.9 35.9 38.7 41.3
Δ in Accounts Receivable (4.9) (16.7) (20.6) (22.8) (22.7) (22.2) (20.1) (19.3)
Δ in Inventory (1.8) (8.3) (9.3) (10.2) (10.2) (10.0) (9.1) (8.7)
Δ in Deferred Income Taxes 0.0 (0.1) (0.2) (0.2) (0.2) (0.2) (0.2) (0.1)
Δ in Other Current Assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Δ in Accounts Payable 8.7 17.5 19.7 21.7 21.6 21.2 19.2 18.4
Δ in Accrued Liabilities 0.0 1.5 1.7 1.8 1.8 1.8 1.7 1.5
Δ in Deferred Revenue 0.0 1.1 1.4 1.5 1.6 1.5 1.4 1.3
Cash Flows Provided (Used) By Operation $23.7 $92.2 $103.6 $115.4 $128.4 $141.2 $153.9 $164.5
Cash from Investing Activities:
Capital Expenditures (4.7) (18.0) (18.0) (29.9) (38.4) (41.9) (45.2) (48.1)
Cash Flows Provided (Used) By Investing Activities ($4.7) ($18.0) ($18.0) ($29.9) ($38.4) ($41.9) ($45.2) ($48.1)
Cash from Financing Activities:
Δ in Long-Term Debt 0.0 (1.3) (1.2) (1.2) (1.1) (1.0) (1.0) (0.9)
Dividends Paid 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash Flows Provided (Used) By Financing Activities 0.0 (1.3) (1.2) (1.2) (1.1) (1.0) (1.0) (0.9)
Δ in Cash $19.0 $72.9 $84.4 $84.4 $88.9 $98.2 $107.7 $115.4

31
Assumptions
Assumptions
Income Statement Historical
Estimate
d Projected
2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Revenue Growth 5.5% 1.4% 10.4% 11.9% 11.2% 10.3% 9.1% 7.9% 6.5%
Football % Growth 2.0% (9.0%) 2.0% 3.5% 3.8% 3.3% 2.9% 2.4% 1.9%
Baseball % Growth 3.0% (0.5%) 5.0% 5.0% 4.4% 3.4% 2.4% 1.4% 0.5%
Soccer % Growth 8.0% 12.0% 16.0% 22.0% 19.1% 17.3% 15.5% 13.7% 11.9%
Lacrosse % Growth 21.6% 23.0% 32.9% 25.1% 21.5% 18.2% 15.0% 11.7% 8.6%
Manufacturing Costs Magin 50.0% 49.3% 51.3% 51.0% 51.0% 51.0% 51.0% 51.0% 51.0% 51.0%
Purchase of Supplies Margin 20.0% 19.3% 19.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6%
Gross Margin 30.0% 31.4% 29.1% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4%
SG&A Margin 15.0% 16.9% 14.8% 13.8% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5%
EBIT Margin 15.0% 14.4% 14.3% 14.5% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9%
Interest Expense as % of Avg. Total Debt 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Tax % of EBIT 36.0% 36.0% 36.0% 36.0% 36.0% 36.0% 36.0% 36.0% 36.0% 36.0%
Profit Margin 9.6% 9.2% 9.0% 9.2% 9.4% 9.4% 9.4% 9.5% 9.5% 9.5%
Balance Sheet
Estimate
d Projected
3Q14 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Days Receivable 79.2 81.0 81.0 81.0 81.0 81.0 81.0 81.0 81.0
Days in Inventory 50.1 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0
Deferred Income as a % of Tax Provision 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%
Days Payable 102.6 108.0 108.0 108.0 108.0 108.0 108.0 108.0 108.0
Accrued Liabilities as a % of COGS 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
Deffered Revenue as a % of Revenue 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Days in Period 92 365 365 366 365 365 365 366 365
Cash Flow Historical
Estimate
d Projected
2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E
CAPEX as a % of Revenue 2.2% 2.5% 2.6% 2.3% 2.0% 3.0% 3.5% 3.5% 3.5% 3.5%
Depreciation & Amortization as a % of Revenue 3.0% 2.8% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

2014 - William Blair Case Competition

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (13)

Similaire à 2014 - William Blair Case Competition

Similaire à 2014 - William Blair Case Competition (20)

Dernier

Dernier (20)

2014 - William Blair Case Competition