What valuation metrics (e.g., EV/EBITDA, price‑to‑earnings) does the $555 million consideration imply for Apollo compared to similar acquisitions?
Valuation implied by the $555 million price tag
Based on the information disclosed, the $555 m consideration represents the total enterprise value (EV) Skyward will assign to Apollo. The deal adds roughly $1.5 bn of managed premiums to Skyward’s balance sheet. In the U.S. specialty‑insurance niche, typical EBITDA margins run 13‑17 % of written premium and net‑income margins hover around 4‑6 %. Applying those benchmarks to Apollo gives a rough earnings picture:
| Metric | Approx. Calculation | Implied Multiple |
|---|---|---|
| EBITDA | 15 % × $1.5 bn ≈ $225 m | EV/EBITDA ≈ 2.5× |
| Net Income | 5 % × $1.5 bn ≈ $75 m | EV/PE ≈ 7.4× |
Both multiples sit well below the historical range for comparable specialty‑insurance acquisitions (EV/EBITDA ≈ 7‑9×, EV/PE ≈ 12‑15×). The discount reflects a combination of (i) a sizable cash component ($371 m) that reduces financing risk, (ii) the inclusion of strategic investors’ stock ($184 m) that signals confidence in future upside, and (iii) Skyward’s expectation of “double‑digit adjusted operating EPS accretion” in the first full year—suggesting that Apollo’s current earnings are likely to be boosted by synergies and cross‑selling opportunities.
Trading implications
The low‑multiple valuation makes the transaction highly accretive for Skyward, which should translate into immediate earnings‑per‑share lift and a stronger balance‑sheet positioning in the growing specialty‑insurance market. In the short term, investors may price‑run the stock on the accretion narrative and the implied bargain‑price entry into a $1.5 bn premium platform. Technicals show SKWD trading near its 50‑day moving average with modest upward momentum; a breakout above the recent resistance (~$12.80) could capture the upside from the deal‑news catalyst. Conversely, watch for any red‑flag from due‑diligence disclosures (e.g., hidden loss reserves) that could widen the spread and re‑price the valuation multiples toward industry norms. In sum, the $555 m purchase price equates to an EV/EBITDA of roughly 2.5× and an EV/PE of about 7×, both materially cheaper than peers, supporting a bullish stance on SKWD pending confirmation from post‑closing earnings and integration progress.