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Technology Stocks : Avalon Group, Inc.
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To: Jon Matz who wrote (794)1/8/1999 10:43:00 AM
From: equalizzer  Read Replies (2) of 1530
 
Eric is correct that valuation is almost impossible to determine. The management of both companies have to build a business plan that shows future potential and increased shareholder values. With the nature of the markets as they are factors that clearly come into the picture are:
1) Valuation. Difficult.
2) The new management team. Structure and association.If the new firm is represented by large law and accounting firms and strong Investment Banking associations, who will support the new business plan then these issues play strongly into the picture.
3) The market the eventual shareholders stock will be traded on. Clearly the current Bulletin Board listing along with shares outstanding and potential future increases in the float from up and coming 144 filings also play a part. If the new stock ends up on a National Exchange with strong investment banker support including analysts reports etc. Then these points play a part.
4) What is the business plan? Where does AHS who have invested $350,000 in this company see the value. Maybe not where some think.

For those who decide not to support the merger they will be protected through dissenter rights. The problem in situations where dissent becomes an issue is AHS can back away and go after other targets. What affect might this have on AVAL? This is why the large expensive firms if they are doing the work are very careful to consider all the angles. Also which State is doing the SEC review etc Some are much stricter than others. California and New York are tough.

The fact that AHS and Avalon are committing to the cost of this exercise and the incredible work involved says a lot.
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