How to Read a Going-Private Deal's Valuation Disclosure

A going-private transaction is a purchase of a public company by a group that includes people who already control it, or who sit inside it. The buyer is also, in some sense, the seller. That conflict is why the SEC requires a filing most investors never open: Schedule 13E-3, a transaction statement that forces the insiders to say, in writing, why they believe the price is fair to everyone else.

Most deal paperwork is promotional. This one is closer to testimony. Under the rules behind Schedule 13E-3 (Item 1014 of Regulation M-A), the filers have to address the factors they considered: the current and historical market price, net book value, going-concern value, liquidation value, prices paid in earlier purchases, and any outside report or opinion they relied on. They can't simply say "fair" and move on.

I want to give you a way to read that testimony in about an hour, and to leave with your own sense of what the business is worth rather than a borrowed one. Our earlier piece on what a merger proxy reveals about deal valuation assumptions covered the banker's math in an ordinary sale. A going-private deal adds a second layer, and the second layer is where the interesting disclosure lives.

Start With Who Is on Both Sides of the Table

Before any number, read the conflict map. In the "Special Factors" section of the proxy statement, which the 13E-3 incorporates, find three things: who is rolling over equity into the buyer, who was walled off from the board's deliberations, and who negotiated on behalf of the unaffiliated shareholders. The answers tell you how much weight to put on the valuation that follows.

Walgreens Boots Alliance (WBA) is a clean recent example. In the March 2025 agreement with Sycamore Partners, executive chairman Stefano Pessina and his holding company agreed to reinvest all of their cash proceeds, plus an incremental cash amount, into the acquiring company. That made the deal an affiliated transaction and is what brought the 13E-3 into the picture. The board's process guidelines then recused Pessina and director John Lederer from deliberations on the Sycamore proposal, and from any valuation discussion tied to it. A board-level transaction committee handled the evaluation, with Centerview Partners and Morgan Stanley as advisors.

None of that proves the price was right. It tells you the process had guardrails, and that the numbers in the next section were produced by advisors who answered to people without a stake on the buyer's side. Treat the recusal language as evidence about the process and nothing more. A well-run process can still land on a price that's wrong.

Read the Valuation Range as a Set of Assumptions

The banker's presentation is where the 13E-3 earns its keep. For a discounted cash flow, the filing normally discloses the discount rate range, the terminal assumption, the projection period, and the resulting per-share or enterprise value range. That is more assumption transparency than any investor gets from a company's own annual report.

Here is what the WBA disclosures say. Centerview discounted cash flows to present value as of November 30, 2024, using discount rates of 9.25% to 10.75%, which it derived from its analysis of the company's weighted average cost of capital. For the terminal value it applied multiples of 5.0x to 7.0x to projected EBITDA for the twelve months ending August 31, 2029. The deal itself offered $11.45 per share in cash, plus potential additional value of up to $3.00 per share from future monetization.

Two things deserve a pause. First, the terminal multiple is doing the heavy lifting, as it usually does (see why terminal value is the most fragile part of a DCF). Second, the discount rate is a banker's judgment, not an observation. If you want to test it, how to choose a discount rate gives you a method for building your own range and comparing it.

Present value of terminal value = (terminal EBITDA × exit multiple) ÷ (1 + discount rate) ^ years to terminal date

Run that formula on the disclosed inputs, ignoring interim cash flows and net debt so the effect of the assumptions is visible on its own. From November 30, 2024 to August 31, 2029 is 4.75 years. The two extremes of the disclosed ranges give you a spread:

• Low end: a 5.0x multiple at a 10.75% discount rate. Each $1 of terminal EBITDA is worth about $3.08 today (5.0 ÷ 1.1075^4.75).
• High end: a 7.0x multiple at a 9.25% discount rate. Each $1 of terminal EBITDA is worth about $4.60 today (7.0 ÷ 1.0925^4.75).

The high end is roughly 49% above the low end, and every dollar of that gap comes from two judgment calls, not from anything the business did. This is the part of the exercise I'd urge you to do by hand at least once. A fair value range that spans nearly half again its own floor is a compass, not a GPS coordinate, and the filing is, to its credit, showing you the compass.

Check the Projections, Then the Price Against the Range

The range is only as good as the forecast beneath it. Find the management projections the advisor used; going-private filings typically disclose them, often with a footnote explaining who prepared them and when. Ask three questions. Were they prepared before or after the buyer appeared? Were they revised during the process? Is there more than one case, and which one did the advisor actually use?

Then do the step that separates reading from skimming: place the offer inside the range. A price near the top of the banker's range says the buyer paid for the optimistic assumptions. A price near the bottom says the unaffiliated holders are being asked to accept the pessimistic ones. Neither is automatically wrong. But you can't know which assumptions you're being asked to accept until you've seen where the price falls.

Keep the distinction between price and value in front of you here. The offer is a price, a number two parties agreed to. The DCF range is the advisors' estimate of value under stated assumptions. A deal can be priced above, inside or below that estimate, and the gap between the two is the thing worth studying. That gap is also where the margin of safety idea applies in reverse: the buyer is hoping to find one.

I'm less sure about the contingent piece than I'd like to be. The "up to $3.00" of additional value depends on future monetization events, and the disclosed analysis can't tell you how much of it to credit. My habit is to value the cash consideration and the contingent amount separately, and to haircut the contingent part hard. That's a judgment, not a rule, and reasonable analysts would haircut it differently.

Run a Five-Step Reading Routine

Here is the sequence I use on any going-private filing. It fits on an index card.

1. Map the conflict. Who rolls equity, who was recused, who negotiated for the unaffiliated holders?
2. List every assumption in the banker's DCF: discount rate range, terminal multiple or growth rate, projection end date, valuation date.
3. Rebuild the terminal value at the extremes of those ranges, as in the example above, and note the spread.
4. Find the projections. Note who prepared them, when, and whether any case was dropped.
5. Place the offer inside the range, then write down what you would have to believe to call it fair.

Step five is the one that matters. It converts a document you were handed into a view you hold. And the Item 1014 factors give you a ready-made cross-check: if the filers cite going-concern value, compare it with the offer; if they discuss liquidation value, test it against our guide to liquidation value as a valuation floor. A filing that mentions a factor and then dismisses it in one sentence has told you something too.

Where This Method Stops Working

A few honest limits. The disclosed analysis is the advisor's summary, not its full model. You see ranges and key inputs, not the cash-flow line items, so you can reproduce the terminal value but not the whole valuation. And the projections tend to be the company's own, which means the range inherits management's view of the future, however carefully the committee probed it.

There is also a selection effect. Deals that get done are the ones where a buyer and a board agreed, so the disclosed ranges describe the area where agreement was possible, not the entire space of defensible values. And a 13E-3 tells you nothing about what the business is worth to someone who does not intend to sell. Holders weighing a vote also have appraisal rights in many states, which is a legal question this post doesn't cover.

Finally, a plain caveat. This is a method for reading disclosures. It is not a view on whether any shareholder should vote for or against a deal, and the figures here come from filings dated 2024 and 2025 that you should check against the originals before relying on them.

Key Takeaways

• Schedule 13E-3 forces insiders to explain fairness in writing, which makes it one of the most assumption-rich filings you can read.
• Start with the conflict map: who rolls equity, who was recused, who bargained for the unaffiliated holders.
• Rebuild the terminal value at the extremes of the disclosed ranges. In the WBA filing, 5.0x–7.0x multiples and 9.25%–10.75% discount rates produce a spread of roughly 49% per dollar of terminal EBITDA.
• Place the offer inside the advisor's range, and write down what you'd have to believe to call it fair. The range is a compass, not a GPS coordinate.