Apocalypse Investment
Lucy Zhang
Alex Ai
Norma Bueso
Raif M Hisham
Prepare for: Topnotch
Technologies
Advice on potential sale
Business Valuation
Report
To: sell side Law Firm, LLP
From: Apocalypse Investment Bank
Re: project bluesky International
Dear Sir/Madam,
It has been a pleasure that we have been invited to estimate the fair market value of Topnotch
Technologies as of January 23, 2011 for the purpose of advising on the subject business for sale to the
Bluesky International. At your request, rather than preparing a self-contained comprehensive report, we
have provided a restricted appraisal report, which is advisory in nature and intended to be used for
advising on the subject business for sale. Please refer to the statement of limiting conditions contained in
the report.
For the purposes of business appraisal, fair market value is defined as the expected price at which the
subject business would change hands between a willing buyer and a willing seller, neither being under a
compulsion to conclude the transaction and both having full knowledge of all the relevant facts. We have
appraised a fully marketable, controlling ownership interest in the assets of the subject business. The
appraisal was performed under the premise of value in continued use as a going concern business
enterprise. In our opinion this premise of value represents the highest and best use of the subject business
assets.
Based on the information contained in the report that follows, it is our estimate that the fair market value
of Topnotch Technologies is between:
The valuation of the Bluesky international Offer is between:
We have no obligation to update this report or our conclusion of value for information that comes to our
attention after the date of this report.
Sincerely,
Table of Contents
I. Overview…………………………………………………………………….3
Bluesky International offer
Topnotch Technologies historical and projected financial
statement
IPO Market Overview
II. Topnotch Technologies Valuation…………………………………..6
Appropriate Valuation Methods
The Discounted Cash Flow (DCF) Results
Selection of the comparable company
The Transaction Company Method Results
Topnotch valuation with control premium
III. Bluesky International Offer..….…..…...................................9
Present value of the considering offer
Share structure and Outstanding Shares’ Value related to the
Bluesky’s IPO
IV. Recommend Modi”cation of the Offer…............................10
Concerns on the terms of the offer
Restructuring of the deal
Overview
Bluesky International offer
Based on the information provided, the Bluesky International has made an offer of $200 million to
purchase the company’s stock (including assumption of debt) for consideration of:
$ in millions Face Value
Cash $65
Ten year seller note (6.5%) 70
Earn out one 10
Earn out two 15
Bluesky International stock 40
