Time to "vote no" again...

For what it's worth, I will be voting no - the stock is definitely undervalued. The "independent report" is undercooking growth, margin improvement, and synergy realisation through consolidation. No idea why this is pitched as a steal above IPO price when it should be valued on what it's worth.

To me, SLA should be punching above $4.2 at a WACC of 10%, and unlevered free cash flow buildup to $15m p.a. This is achievable at lower than historical revenue growth rates (i.,e circa 15%, to sub 3% terminal), tapered off gross margin/opex margins, and growing business combination expenditure and CapEx.

Revenue growth is the key driver of the valuation and I was surprised to see the valuation report assumed a 5.6% CAGR in revenue and then sensitised NPV based on 1% increments in revenue when SLA is consistently hitting double-digit growth circa 20% YoY. Knowing that the range put forward is based on the sensitivity analysis it appears wildly unrealistic. The report also manages to bump up WACC 2% above what it should be through overestimated MRP and a 1% for uncertainty in revenue.

The 2017 KKR acquisition of LCA (with sizeable franchise arm) went for forward multiple EV/EBITDA of 14x and ASC went for 10.5x in 2021 (with less than half of the number of clinics). The report completely disregards the analysis of the LCA transaction.

Very disappointing, but happy to share my analysis if anyone is interested.