Background of the Business Combination
Opinion of Aldel’s Financial Advisor
Update to Valuation Analyses
ThinkEquity revised the Market Multiples Analysis of Insurance Companies — peer group, smaller, faster-growing companies in the insurance space included in its valuation analysis to update the enterprise value of Goosehead Insurance, Inc. and BRP Group, Inc. to include value for the non-controlling interests of each such company, which were initially omitted from the calculations for such companies. The revised valuation analysis does not change the conclusion included in the fairness opinion that the consideration to be paid by Aldel in connection with the Business Combination is fair, from a financial point of view. ThinkEquity also updated its Discounted Cash Flow Analysis as set forth below.
UPDATE 1: The valuation analysis included in the Proxy Statement dated November 10, 2021 under the caption “Proposal 1 — The Business Combination Proposal — Valuation Analyses — Market Multiples Analysis of Insurance Companies — peer group, smaller, faster-growing companies in the insurance space” is deleted and replaced with the information set forth below.
Market Multiples Analysis of Insurance Companies — peer group, smaller, faster-growing companies in the insurance space. To estimate an enterprise value for Hagerty, ThinkEquity calculated the following with respect to each of the five peer group companies, listed below:
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Enterprise value as multiples of:
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Last twelve months (“LTM”) and estimated calendar year 2021 (“CY±1”) and calendar year 2022 (“CY+2”) sales
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LTM, CY+1, and CY+2 earnings before interest, taxes, depreciation, and amortization (“EBITDA”)
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LTM earnings before interest and taxes (“EBIT”)
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Stock price as multiples of estimated CY+1 and CY+2 to earnings per share (“EPS”)
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Projected EPS growth
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Ratio of stock price to earnings (“PE”) divided by rate of earnings growth (“PEG Ratio”)
Peer group companies, smaller, faster-growing companies in the insurance space:
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Root, Inc.
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Kinsale Capital Group, Inc.
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Palomar Holdings, Inc.
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Goosehead Insurance, Inc.
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BRP Group, Inc.
This analysis indicated the following implied high, average, median and low multiples for the selected companies: