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Microcap & Penny Stocks : FAMH - FIRAMADA Staffing Services
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To: Gary Smith who wrote (9729)3/31/1998 10:54:00 PM
From: HRGuy  Read Replies (2) of 27968
 
Gary

Your comment got me thinking.
"We need to stay @ 4:1 folks; don't snooze on that issue."

Keeping at 4:1 is the key to the success or failure of this acquisition, merger or whatever you want to call it. Without that relationship or something relatively close the deal may fall thru.

If I were Ira and I were negotiating with some disgruntled AXTI shareholders I could see offering up a minimum stock price for which FAMH would need to hold above or else the deal would be off.

Now how to go about determining that price?

(I like to check out the logic first before I do my calculations, so bear with me)

Typical at least for larger transactions in a buyout situation, which is the way I believe we should perceive this, the sales price (outstanding shares * ATXI current price(=4*FAMH minimum price)) is based upon a multiple of profits. The multiple is industry based but would need to be discounted based on future prospects and needs to be adjusted for their current cash position (my gut says a multiple of 4 is fair, maybe a little generous).

What does all this yield?

1,400,000*4*(FAMH min)= 4*2,000,000

FAMH min = $1.43, maybe a multiple of 4 was too generous

Using a multiple of 3 we get $1.07

Wouldn't be surprised if Ira did sign up to a $1.00 FAMH stock price on this deal. Music to my ears if the numbers are right because this means that the financials and the Myriad deal foretells of great things to come, because thats the only way we get there from here.

What say ye, my logic make sense? Need to research the multiple though!

CJ
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