Just had a read of the Grant Thornton Independent Expert's...

Just had a read of the Grant Thornton Independent Expert's Report and I have tried to keep an open mind. However I find it hard to take it sincerely as some parts of it honestly read like it was written by a 1st year Uni student (e.g. read the section on p25 under Aerial imagery where it then muddles up satellite imagery). It also seems to completely ignore the argument the Board is making that a key reason to support the deal is that Nearmap may be left behind under industry consolidation. There is no meaningful discussion in the IER about the competitive landscape and -- perhaps understandably -- the report really reads like a long winded justification of its valuation methods. To be fair to Grant Thornton it's not their job to do competitive analysis, it is as stated to determine if the Scheme is "fair" and "reasonable".

This leads me to the question of what is a fair valuation?

I do agree with the Board and general sentiments that if the deal is voted down the share price will fall materially. I can't see any reasonable argument against this.

However the question for shareholders is what is this business worth in FY24, FY25, and beyond?

Grant Thornton conveniently summarises the ACV and revenue forecasts on p54 of the IER, (p146 of the PDF) suggesting revenue deltas from FY23 to FY24 , to FY25 of ~$40m, then $49m. Given that management had forecast cashflow positive in FY24, it's hard to imagine that a good chunk of that FY24 to FY25 revenue delta of $49m would not flow through to the bottom line.

Hypothetically, if the business was throwing out $30m/year and ACV is growing 25% a year with a significant proportion flowing through to the bottom line, what would it be worth?

Assuming no additional share issues, I wouldn't be surprised if we were back to $2.10 during FY25 and: if the bottom line is growing rapidly and/or we have expanded into new territories, it's hard to imagine the share price going anywhere but up.

I guess the picture I'm seeing (and welcome debate on this) is that potentially a vote against the deal would see us take an immediate hit but be back to the offer price within 2-3 years, with all of the upside beyond. I acknowledge this is assuming "status quo" execution, i.e. no material negative surprises. I also acknowledge the macro-economic conditions well covered in the Scheme Booklet -- however regardless of macro conditions at some point it becomes hard to ignore the fact that a business is printing money.

I feel that my thinking is not too far off the mark given that Thoma Bravo are making this offer with the expectation of profit. It's also interesting to note that they are happy to make a $2.10 offer in light of the outstanding litigation too. If they felt the litigation was a material risk to the business then the offer would surely have to be lower.