A client recently acquired another company and they have an option to receive (i) 10% of the sub’s 2018 EBITDA amount if the 2018 EBITDA is over $300mm ($0 if EBITDA <$300mm); (ii) max(0, 20% of the sub’s 2019 EBITDA less 2018’s payment) if the 2019 EBITDA is over $400mm). Describe how you would go about valuing this option and the risks that you would capture in this analysis.