It is early in October 2002, and your investment bank has been hired by the management team at Dick’s Sporting Goods (DKS) to determine a valuation/ offering price for their stock’s IPO. About Dick’s Sporting Goods: DKS, headquartered in Pittsburgh, Pennsylvania, was founded when Dick Stack opened his first store in 1948 with $ 300 from his grand-mother’s cookie jar. This company is growing rapidly and plans to use the IPO proceeds for store openings and acquisitions. DKS operates more than 130 stores in twenty-five states, primarily in the eastern United States. The store format is a large big-box store containing smaller shops featuring sporting goods, apparel, and footwear for activities ranging from football and golf to hunting and camping. Besides brands such as Nike and Adidas, Dick’s carries Ativa, Walter Hagen, and others exclusive to the company. At the time of the IPO, the DKS management team included the founder’s son, Ed, who holds 37% ownership in the company, and the investment firm Vulcan Ventures(founded by former Microsoft executive Paul Allen), which owns 12% of DKS as a result of a private equity investment. Industry/ Market Overview: With the rise of big-box retailers, sporting goods retail-ers were consolidating. In 1997 and 2001, Gart Sports Company (GRTS) acquired Sport Mart Inc. and OSH Sporting Goods, respectively. Private equity and venture capital firms held equity investments within the industry. DKS was the first retailer to launch an IPO