Project Meridian — Special Committee Take-Private

What you are handed at the start of the case, in the format a real process would use.

• Meridian public filings summary

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  Three years of income statement, balance sheet and cash flow detail as a filer would present them — stock-based compensation and depreciation allocated to the functional expense lines and disclosed in the cash flow statement, acquired-intangible amortization shown separately — plus segment disclosure, the reconciliation of net income to adjusted EBITDA, and the capitalization table: 138.6mm basic and 145.0mm diluted shares, $520mm of gross debt, $195mm of balance sheet cash. FY2024A revenue of $712mm and adjusted EBITDA of $158mm; FY2025A revenue of $845mm and adjusted EBITDA of $212mm. The addback detail is here rather than summarized for you; read it before you accept adjusted EBITDA as the earnings base.

• Management internal plan

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  The five-year Management Case as presented to the board — revenue from $1,021mm in 2026E to $1,363mm in 2030E, with adjusted EBITDA margins expanding from 27.0% to 29.5% — plus stock-based compensation, D&A split between core depreciation and acquired-intangible runoff, capex, working capital and the 25% tax rate needed to build unlevered free cash flow. Calendar-year periods only: there is no forward twelve-month column, because from a mid-March valuation date you have to calendarize one yourself.

• Deal chronology and 2022 PIPE documentation

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  The January 23 standstill waiver request and its Schedule 13D amendment, the Board's January 26 formation of the Special Committee and its January 30 grant of the waiver, the February 9 proposal at $17.25, the March 6 revision to $18.50 and the conditions attached to each, the Committee's authorizing resolutions, and the standstill and information-rights provisions from the 2022 PIPE under which Ridgeline acquired its 27.4%. Read the dates in order and ask when each condition first appears.

• Selected market and trading data

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  Daily trading history for Meridian around the January 22 unaffected date and the March 6 revised proposal, with 30-day, 60-day and 90-day VWAPs, the quarterly trading range, the 52-week range, average daily volume and value, and the ownership summary. Research coverage for the nine publishing analysts, with the ratings split, the $14.00 to $22.00 price target range against a $17.50 median, and consensus CY2026E revenue and adjusted EBITDA. It carries no comparable-company or precedent-transaction table: that data reaches you only through the raw extract, unscreened, because deciding what belongs in each set is part of the exercise.

• Blank modeling template

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  The Committee workbook with every tab, label, header and given assumption in place and every cell you are expected to produce left empty: Historical Financials is given in full and Assumptions & Inputs is given except for the 35 cells that are your own judgment, and Projections, Analysis at Various Prices, Sources & Uses, DCF, Comparable Companies, Precedent Transactions, Minority Buy-Ins, Football Field, Premiums Paid, and LBO & Ability to Pay are yours to build — 1,320 cells in all. Constituent names, observed multiple ranges, the discount rate and exit ranges, the debt quantum, the ladder columns and the return hurdles are blank, because the prompt asks you for them. Build in it and the exhibits come out in the format the Committee reads them in.

• Selected companies and precedent transactions — raw extract

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  The unformatted data pull behind the comparable-company and transaction tables: constituent-level trading statistics, enterprise values, deal terms and a footnote column carrying the raw descriptive detail on each name, as they come off the screen, before anyone has decided what belongs in the set. No medians, no means, no sorting. It carries more constituents than the analysis should use, including transactions that are not change-of-control events, and it publishes the minority buy-in transactions on their own sheet with each acquirer's pre-existing stake in a column. Screening the sets down, and being able to defend what you dropped and what you kept, is part of the work — one excludable row is enough to move the recommendation.

The deliverables, in the order the committee will read them. The exercise runs 300 minutes.

1. PART 1

   Projections and the forward period

   Complete the Projections tab: the five-year Management Case revenue build by segment, adjusted EBITDA and margin, stock-based compensation, D&A, capex and working capital, and unlevered free cash flow. Separate reported from organic growth in FY2026E and label which basis any growth rate you quote is on — the acquisition that closed mid-FY2025 makes the two materially different. Then derive the forward twelve-month column from the March 14, 2026 valuation date yourself; it is not supplied, and the calendar weighting is your judgment. Check the result against the periods on either side of it before any multiple is built off it.

2. PART 2

   Discounted cash flow — Management Case and Street Case

   Build the DCF tab. The template strikes unlevered free cash flow AFTER stock-based compensation — say why that basis is defensible, and what adding it back and grossing the share count up would have changed. Build unlevered free cash flow on that basis for all five years. Choose the discount rate range and the terminal exit multiple range, and make sure the multiple is calibrated to the same earnings base your cash flows are struck on. Use the mid-year convention. Produce a discount rate by exit multiple sensitivity grid and disclose terminal value as a percentage of enterprise value on the face of the exhibit. Then run the same mechanics a second time on the Street's numbers rather than management's, and be prepared to say why a management-only case is a weakness in a conflicted deal.

3. PART 3

   Comparable companies

   Screen the raw extract down to the peer set you will actually use and be able to defend every name you dropped. Build equity value, enterprise value, revenue and EBITDA multiples, growth and margin for each survivor, with median and mean. Restate the same peers on the same basis the DCF is struck on, after stock-based compensation — peer compensation intensity varies widely and does not track the adjusted multiple. Then place Meridian at $18.50 on both bases and say whether the position is deserved on growth and margin.

4. PART 4

   Precedent transactions and the minority buy-in screen

   Screen the transaction extract and build the third-party change-of-control precedent set on both yardsticks, premium to unaffected and EV / LTM adjusted EBITDA, with median, mean, high and low. Expect the two yardsticks to rank the deals differently and say which governs. Then build the second screen the extract supports and the third-party set does not: transactions in which an existing significant holder bought in the minority. Deciding that Meridian needs that screen, constructing it, and reporting the observed move from first proposal to final price are graded parts of this case.

5. PART 5

   Analysis at various prices

   Build the price ladder the Committee will negotiate from. Run the unaffected price, the current price and the $18.50 proposal as reference columns, bracketing the proposal, then illustrative prices above it in even steps — the columns are your choice. At each price show implied equity value and enterprise value off 145.0mm diluted shares, $520mm of debt and $195mm of cash; premiums to unaffected, to the 30-day VWAP, to current and to the 52-week high and low; and implied EV against LTM, forward and CY2026E revenue and adjusted EBITDA. Do not title the exhibit with a price that is not one of its columns.

6. PART 6

   Sources and uses at the proposal

   Build sources and uses at $18.50: purchase of the fully diluted equity Ridgeline does not own, the rollover of Ridgeline's existing stake, repayment of the existing debt, transaction fees, cash applied against a minimum operating cash balance, and a reserve for appraisal cash — this is a cash merger, so every share not voted in favor carries an appraisal right and the cash has to be funded. Set the debt quantum yourself. Show pro forma gross and net leverage on more than one earnings basis, and quantify how much smaller Ridgeline's new equity check is than a third-party buyer's would be at the same price and the same debt.

7. PART 7

   LBO and ability to pay

   Build the sponsor return model over a five-year hold: debt schedule with a cash sweep on beginning-of-period balances, exit equity value, a management incentive pool, multiple of money and IRR. Bridge the multiple of money into value from EBITDA growth, debt paydown and multiple expansion, and value leaked to management — a return leaning on multiple expansion is a weaker return and the exhibit must show it. Then solve for the maximum price at each of your chosen return hurdles, and state on the face of the exhibit what you assumed about the exit multiple as price flexes. Holding the exit multiple fixed while raising the entry price is a real convention, but it embeds multiple contraction, and an exhibit that does not disclose which convention it used is not usable.

8. PART 8

   Football field and premiums paid

   Assemble the valuation summary. Every implied per-share range must be computed from the multiple range printed beside it, including a separate row for the minority buy-in screen and a separate row for the Street Case DCF. Shade reference-only methodologies — premiums paid, analyst targets, 52-week range — distinctly from the primary methodologies. Build premiums paid on both the third-party and the minority buy-in sets, applied to the unaffected price. Say where $18.50 sits within each range as a percentage of that range's width, and say where the evidence points in two directions.

9. PART 9

   Recommendation to the Committee

   One page. Accept, reject, counter at a specific price, or authorize a market check. Give the number, and give the reservation price behind it. Name the yardstick the number rests on and the yardsticks that cut the other way. Then address the process: the standard of review this transaction will actually be judged under on its own chronology, and the conditions the Committee should require — the vote condition, the go-shop and its termination fee, matching rights, and information rights — distinguishing terms the buyer has proposed from terms you are asking for. Finally, name the one analysis you would want completed before the Committee commits.

The order a strong candidate works in, and why. This is the shape of the answer — the finished answer deck, Excel model and memo are in the solution set below.

1. 01

   Check the arithmetic is possible before you check that it foots

   The forward twelve-month column is the base of the entry multiple, the leverage and the comps positioning, so an error there propagates into everything. Derive it from the valuation date rather than accepting one, and then check that a forward period sits between the periods that bracket it. A forward figure outside its own brackets is impossible, and the fix is arithmetic rather than judgment.

2. 02

   Defend the stock-based compensation basis, and carry it everywhere

   Meridian's stock-based compensation is a fifth of adjusted EBITDA and it is the single largest valuation judgment in the case. Two treatments are defensible — charge it as an operating cost and hold the share count, or add it back and dilute the count forward — and this template takes the first, which is why every cash flow row is struck after it. Doing both charges the cost twice; doing neither, which is what building unlevered free cash flow from adjusted EBIT does, charges it not at all. The work is knowing why the basis is defensible, what the other one would have moved, and then carrying it through to the terminal value — a multiple calibrated on one earnings base is meaningless applied to another.

3. 03

   Fix the unaffected date before you compute a single premium

   Every premium in the deck is quoted off one number. The candidates are the close before the standstill waiver request, the day before the February proposal, and the current price. They are not interchangeable, and the gap between them is worth many points of headline premium. Pick one, write the reasoning on the page, and hold it across every exhibit.

4. 04

   Screen the extract, then ask whether you have the right screen at all

   Excluding the constituents that do not belong is the first half of the work. The second half is noticing what the surviving set still cannot tell you: a set of third-party purchases of whole companies answers a question about control transactions, and the transaction in front of you is an insider buying in the minority. Building the second screen is a judgment nobody prompts you to make.

5. 05

   Read the chronology as a term sheet, not as background

   The order of events determines the standard of review, which determines how much the process protections are worth and what you are really negotiating for. Note when the committee was formed, when the first economic proposal landed, and when each condition first appears in the record. If a full price round ran before a condition existed, the condition did not precede the negotiation, and a memo that says protections were in place from the outset is contradicted by documents that will be publicly filed.

6. 06

   Convert the range into a decision, with a floor behind it

   The proposal will sit inside most of the methodologies, and that observation is not a recommendation. Name the action and the price, then name the reservation price behind it — a counter with no headroom is an ultimatum, and a Committee that opens at the number it would actually accept has nowhere to go. Pair the price with the process conditions the conflict requires, and be honest about which pieces of evidence cut against you.

The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.

The specific traps in this case — the places candidates lose the assessment without noticing.

• Which price the premiums are measured from decides the headline, and the case makes the wrong choice the easy one. The stock has run to $16.20 since the standstill waiver became public, so the current price is what sits on the screen when you start, and quoting the proposal against it produces a 14.2% premium. Against the January 22 close of $13.75 it is 34.5%; against the prior 30-day VWAP of $13.10 it is 41.2%. The reference is a judgment you have to make, defend on the page and then hold, because it does not stay in one exhibit — it propagates into the premiums paid comparison, the price ladder and the recommendation, and a deck that uses two different anchors in two different places will be caught.
• The two precedent yardsticks disagree, and the disagreement is real rather than rhetorical. At $18.50 the premium to unaffected and the implied multiple of LTM adjusted EBITDA point in opposite directions relative to the set you screen, and both are correctly computed. The temptation is to average them, or to quote whichever supports the conclusion you have already reached. Neither is analysis. What the case asks is for you to work out what each ratio is actually measuring, decide which one governs here and why, and be willing to state on the page that the evidence points in two directions — including the part of it that cuts against your own recommendation.
• The label you attach to the transaction changes which comparisons are valid. Ridgeline holds 27.4%, which is a large minority stake and not legal control, so the familiar controlling-holder shorthand is both wrong on the facts and analytically expensive, because it points you at the wrong precedent population. But treating the situation as an ordinary bidder approach is equally wrong: there is no auction to run against a holder of a quarter of the stock who has not said it would sell. Working out what the Committee's leverage actually consists of, which precedent population is the right comparison, and how the transaction should be structured given the gap between the legal label and the practical reality is the governance half of the assignment.
• The sources and uses page and the returns model contain the negotiating argument, and both are usually built as compliance exhibits. Because Ridgeline rolls its stake rather than buying it, its incremental check per dollar of price is smaller than a third-party buyer's — but sizing that advantage is not the same as showing the buyer has a return cushion, and the two claims support very different recommendations. Whether there is room above $18.50, how much, and what kind of room it is, are questions the ability-to-pay analysis answers only if you are explicit about the assumptions inside it. Building the pages to prove the deal is financeable and moving on throws the point away.
• 'Inside every range' is not a conclusion. The proposal will sit within the trading comparables, the precedents and the DCF, and the football field will show it. A football field displays uncertainty, and these ranges are wide enough that almost any price between the unaffected close and the 52-week high sits inside several of them. The Committee asked what to do at this meeting. A recommendation naming a specific action at a specific price, with a reservation price behind it, tied to the yardstick you argued should govern and paired with the conditions attached, is an answer; reporting that the proposal falls within the observed ranges is not.

The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.

A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.

• Project Cardinal — Paper LBO with a Cash Sweep

  Paper LBO · 30 minutes