Solta Medical to Acquire Sound Surgical

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On Tuesday, medical aesthetics equipment maker Solta Medicalannounced that it has agreed to acquire privately held peer Sound Surgical Technologies for $30.5 million -- $5 million cash, plus $25.5 million worth of Solta's own stock. Solta also may pay Sound Surgical's shareholders up to $9.5 million more in "earn outs" based on the company's performance in 2013.

Sound Surgical grew revenues 40% to $23 million in 2012, generating more than $2 million in earnings before interest, taxes, depreciation, and amortization. Solta says the acquisition should be accretive to earnings, exclusive of purchase and integration costs, within a year after closing.

Solta expects to close the transaction in Q1 2013. Sound Surgical CEO Daniel S. Goldberger has agreed to stay on as a consultant for six months post-acquisition to assist with the integration of the two companies.


At the initial purchase price of $30.5 million, Solta will be paying at least 1.33 times sales for Sound, a price roughly equal to the 1.3-times-sales valuation its own shares command. If, however, Sound earns out the extra $9.5 million, and the purchase price rises to $40 million in total value, the valuation would be closer to 1.74 times current-year sales, making for a significant premium to Solta's own valuation.

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The article Solta Medical to Acquire Sound Surgical originally appeared on Fool.com.

Fool contributor Rich Smith and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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