National Holdings Corporation (NHLD)

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National Holdings’ takeover value is $8/share to $14/share.

CB Pharma Acquisition Corp. (CNLM) ("CB") has bid $3.25 per share for National Holdings Corp. However, based on similar transactions, NHLD should be valued between $8 per share and $14 per share as detailed below.

An analysis of NHLD’s worth based on various multiples of NHLD from similar transactions produces the following:

Price-to-Revenue: 0.56 x $184 million = $102.8 million or $8.26 per share

Price-to-Cash Flow*: 12.25 x $8.4 million = $102.9 million or $8.27 per share

Price-to-Net Assets: 3.01 x $58.5 million = $176.1 million or $14.15 per share

Additionally, the tremendous value NHLD brings is based on its 1,100 Independent Advisors. These professionals are expensive to hire. While NHLD is very frugal, it can still take the them six-to-nine months just to break-even on a newly hired Independent Advisor. Potential bidders looking at NHLD’s Investment Advisors know two things:

1) An acquisition is a less expensive way to hire a group of Independent Advisors.
2) NHLD’s Investment Advisors are solid professionals who can perform at a much higher level.

In similar transactions, acquirers have paid $116,000 to $161,000 per Investment Advisor, which would value NHLD at $128.3 to $176.7 million or $10.31 per share to $14.20 per share.

All of these values match the $8 to $14 range calculated in post #203 and clearly shows NHLD’s value is much greater than the $3.25 per share bid by CB.
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Note: NHLD has no Long-Term Debt, but has the capacity for it. As a result, when we calculate NHLD's value based on its book value (BV) and given that similar transactions have ranged from 4 times BV to 13 times BV, it produces insanely high purchase prices. For instance, just using the lower amount produces the following:

Price-to-Book Value (excluding Goodwill): 4.0 x $58.2 million = $237.7 million or $19.09 per share


* 2013 Net cash provided by operating activities