Jack Henry & Associates, Inc. Investment Banking Valuation and Financial Institution Service Provider Industry Analysis
Powers, Jonathan M.
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This paper is an investment banking valuation of Jack Henry & Associates Inc. and an analysis of the financial institution service provider industry. Jack Henry & Associates is a service provider for banks and credit unions. It provides core processing solutions for banks and credit unions. It also provides online bill payment solutions. The industry analysis consists of a study of Jack Henry & Associates' self-defined peer group. The peer companies are in the business of providing specialized computer software, hardware and related support services to financial institutions and other businesses. Jack Henry & Associates listed ten companies that it feels to be comparable and suitable to compose a group of its peers. The analysis studies the peer group and two other companies that lnntron, an information technology consulting firm, lists as being highly competitive with Jack Henry & Associates. By looking at these thirteen companies' key financial highlights, trends can be seen in the industry. There was an· overall growth in the industry over the past four years. This promising growth and quality performance by the industry validates that investing in Jack Henry & Associates would be a wise investment decision because it proves Jack Henry & Associates is part of an industry that is growing in value. The investment banking valuation confirms that Jack Henry & Associates is a good company to invest in due to its growing value and continuing positive performance. The valuation model uses the weighted average cost of capital to create a five year forecasting of financial performance and a valuation indicating a high opportunity for future growth in value. The model uses five different scenarios to calculate different possible outcomes in its forecasts: base scenario, management scenario, best case scenario, stress case downside 1 scenario, and stress case downside 2 scenario. Jack Henry & Associates' business overview, its industry overview, and its risk factors illustrate the qualitative value of Jack Henry & Associates. The investment banking valuation is a model that can be used on any company to determine its valuation and quality as an investment.