Coastal Capital Acquisition Corp (CCAJ)

[SW Investor]

I agree on your basic points on valuation however, let's agree that the complex present value calculation can be synthesized down to a PE ratio. When we value an operating business, we look at a number of metrics to come up with a public valuation. Keep in mind that we would only deal with real businesses with real revenues and quantifiable margins. In other words, companies that would have been good candidates for a regional IPO pre 2000. We can either take an average of the Russell index PE or look for specific public industry proxies. The reason we like shells is that we can structure the capitalization to achieve the post merger trading price we desire based on the relationship between the fundamental value of the business (whether a multiple of revenues or net income)and the fully diluted shares outstanding. As far as management goes, Coastal may have a great management team but, in the end, it will be the operating business and its owners and managers that will control the post merger company going forward. So it really comes down to pricing Coastal to be competitive as a shell vehicle and that comes down to price/dilution. My point is that shells have a rational value and when the market caps get too high, no REAL business will tolerate the dilution.