Download - Corporate Finanial Managemnt
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Corporate financeBy
R.Masilamani
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Contents
1.Whats Corporate finance2.Capitalinvestment decisions
2.1 The investment decision
2.1.1 Project valuation
2.1.2 Valuing flexibility
2.1.3 Quantifying uncertainty
3. Working capital management 3.1
The financing decision
3.2 The dividend decision
3.3 Corporate finance theory and
research
4.Relatioship with other areas infinance
4.1 Investment banking
4.2 financial risk management
4.3 Personal and public finance
5.Alternate approaches
6.See also
7.rferences
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Whats Corporate finance
14/4/2012 adapted from Wikipedia 3
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Whats Corporate Finance
Corporate finance is the area offinance
dealing with monetary decisions that business
enterprises make
The tools and analysis used to make these
decisions, and
The primary goal of corporate finance is to
maximizeshareholder value
14/4/2012 4adapted from Wikipedia
http://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Shareholder_valuehttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Shareholder_valuehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Finance -
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Whats Corporate Finance
Corporate Finance vs Managerial finance
in principle it is different from managerial
finance
Managerial Finance studies the financialdecisions of all firms, rather than corporations
alone
However, main concepts of corporate financeare applicable to the financial problems of all
kinds of firms
14/4/2012 5adapted from Wikipedia
http://en.wikipedia.org/wiki/Managerial_financehttp://en.wikipedia.org/wiki/Managerial_financehttp://en.wikipedia.org/wiki/Managerial_financehttp://en.wikipedia.org/wiki/Managerial_finance -
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Whats Corporate Finance
The Discipline of Corporate Finance
The discipline of CF can be divided into,
long-term and
short-term
decisions and techniques
14/4/2012 6adapted from Wikipedia
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Whats Corporate Finance
Long term decisions
Capital investment decisions are long-term
choices about which projects receive
investment, whether to finance that
investment with equity or debt, and when or
whether to pay dividends to shareholders
14/4/2012 7adapted from Wikipedia
http://en.wikipedia.org/wiki/Capital_investmenthttp://en.wikipedia.org/wiki/Ownership_equityhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Dividendshttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Dividendshttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Ownership_equityhttp://en.wikipedia.org/wiki/Capital_investment -
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Whats Corporate Finance
Short term Decisions
short term decisions deal with the short-term
balance ofcurrent assets and current liabilities
the focus here is on managing cash,
inventories, and short-term borrowing and
lending (such as the terms on credit extended
to customers
14/4/2012 8adapted from Wikipedia
http://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Assets -
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Whats Corporate Finance
Investment Banking
The terms corporate finance and corporate
financier are also associated with investment
banking
The typical role of an investment bank is to
evaluate the company's financial needs and
raise the appropriate type of capital that best
fits those needs
14/4/2012 9adapted from Wikipedia
http://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_banking -
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Capital investment decisions
14/4/2012 adapted from Wikipedia 10
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Capital investment decisions
The Definition
Capital investment decisions are long-term
corporate finance decisions relating to fixed
assets and capital structure
Capital investment decisions comprise an
investment decision, a financing decision, and
a dividend decision
14/4/2012 11adapted from Wikipedia
http://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Fixed_assets -
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Capital investment decisions
CIP decisions are based on several inter-related criteria: (1) Corporate management seeks to maximize the value of the
firm by investing in projects which yield a positive
net present value when valued using an
appropriate discount rate in consideration of risk
(2) These projects must also be financed appropriately
(3) If no such opportunities exist, maximizing shareholder
value dictates that management must return excess cash
to shareholders (i.e., distribution viadividends)14/4/2012 12adapted from Wikipedia
http://en.wikipedia.org/wiki/Projecthttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Financinghttp://en.wikipedia.org/wiki/Financinghttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Project -
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Capital investment decisions
The investment decision Management must allocate limited resources
between competing opportunities (projects)
in a process known as capital
this investment, or capital allocation, decision
requires estimating the value of each
opportunity or project, which is a function of
the size, timing and predictability of future
cash flows al budgeting.
14/4/2012 13adapted from Wikipedia
http://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgeting -
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Capital investment decisions
Project valuation In general, each project's value will be estimated using a
discounted cash flow (DCF) valuation, and the opportunity
with the highest value, as measured by the resultant net
present value (NPV) will be selected This requires estimating the size and timing of all of the
incrementalcash flows resulting from the project
Such future cash flows are then discounted to determine
theirpresent value (see Time value of money). These presentvalues are then summed, and this sum net of the initial
investment outlay is the NPV.
14/4/2012 14adapted from Wikipedia
http://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Present_valuehttp://en.wikipedia.org/wiki/Time_value_of_moneyhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Time_value_of_moneyhttp://en.wikipedia.org/wiki/Present_valuehttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Discounted_cash_flow -
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Capital investment decisions
Project valuation The NPV is greatly affected by the discount rate.
Thus, identifying the proper discount rate often termed, the project
"hurdle rate"[5] is critical to making an appropriate decision.
The hurdle rate is the minimum acceptable return on an investmenti.e.the project appropriate discount rate.
The hurdle rate should reflect the riskiness of the investment, typically
measured by volatility of cash flows, and must take into account the project-
relevant financing mix.
Managers use models such as the CAPM or the APT to estimate a discount
rate appropriate for a particular project, and use the weighted average cost
of capital (WACC) to reflect the financing mix selected.
14/4/2012 15adapted from Wikipedia
http://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Volatility_(finance)http://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Arbitrage_pricing_theoryhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Arbitrage_pricing_theoryhttp://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Volatility_(finance)http://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Discount_rate -
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Capital investment decisions
Valuing flexibility
In many cases, for example R&D projects, a project may open (or
close) various paths of action to the company, but this reality will not
(typically) be captured in a strict NPV approach.
Management will therefore (sometimes) employ tools which place an
explicit value on these options.
whereas in a DCF valuation the most likely or average or scenario
specificcash flows are discounted, here the flexible and staged
nature of the investment is modelled, and hence "all" potentialpayoffs are considered.
The difference between the two valuations is the "value of flexibility"
inherent in the project.
14/4/2012 16adapted from Wikipedia
http://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/Expected_valuehttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Mathematical_modelhttp://en.wikipedia.org/wiki/Moneynesshttp://en.wikipedia.org/wiki/Moneynesshttp://en.wikipedia.org/wiki/Mathematical_modelhttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Expected_valuehttp://en.wikipedia.org/wiki/R%26D -
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Capital investment decisions
Valuing flexibility
The two most common tools are Decision Tree
Analysis (DTA) and Real options analysis
(ROA); they may often be used
interchangeably
14/4/2012 17adapted from Wikipedia
http://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Decision_tree -
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Valuing flexibility In conjunction with NPV, there are several other
measures used as (secondary) selection criteria in
corporate finance. These are visible from the DCF and
include discounted payback period, IRR, Modified IRR,equivalent annuity, capital efficiency, and ROI.
Alternatives (complements) to NPV includeMVA / EVA
(Joel Stern Stewart & Co) and APV (Stewart Myers). See listof valuation topics.
14/4/2012 18adapted from Wikipedia
Capital investment decisions
http://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Discounted_payback_periodhttp://en.wikipedia.org/wiki/Internal_rate_of_returnhttp://en.wikipedia.org/wiki/Modified_Internal_Rate_of_Returnhttp://en.wikipedia.org/wiki/Equivalent_Annual_Costhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Economic_value_addedhttp://en.wikipedia.org/wiki/Stern_Stewart_%26_Cohttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Stern_Stewart_%26_Cohttp://en.wikipedia.org/wiki/Economic_value_addedhttp://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Equivalent_Annual_Costhttp://en.wikipedia.org/wiki/Modified_Internal_Rate_of_Returnhttp://en.wikipedia.org/wiki/Internal_rate_of_returnhttp://en.wikipedia.org/wiki/Discounted_payback_periodhttp://en.wikipedia.org/wiki/Decision_making -
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Capital investment decisions
Valuing flexibility
The two most common tools are
Decision Tree Analysis (DTA) and
Real options analysis (ROA)
they may often be used interchangeably
14/4/2012 19adapted from Wikipedia
http://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Decision_tree -
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Capital investment decisions
Valuing flexibility DTA values flexibility by incorporatingpossible events
(or states) and consequent management decisions.
(For example, a company would build a factory given
that demand for its product exceeded a certain level
during the pilot-phase, and outsource production
otherwise. In turn, given further demand, it would
similarly expand the factory,and maintain itotherwise. In a DCF model, by contrast, there is no
"branching" each scenario must be modelled
separately.)
14/4/2012 20adapted from Wikipedia
http://en.wikipedia.org/wiki/Event_(probability_theory)http://en.wikipedia.org/wiki/State_priceshttp://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/State_priceshttp://en.wikipedia.org/wiki/Event_(probability_theory) -
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Capital investment decisions
Valuing flexibility In the decision tree, each management decision in response to an "event"
generates a "branch" or "path" which the company could follow; the
probabilities of each event are determined or specified by management.
Once the tree is constructed:
(1) "all" possible events and their resultant paths are visible to
management; (2) given this knowledge of the events that could follow, and
assuming rational decision making, management chooses the actionscorresponding to the highest value path probability weighted;
(3) this path is then taken as representative of project value. See
Decision theory#Choice under uncertainty
14/4/2012 21adapted from Wikipedia
http://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Optimal_decisionhttp://en.wikipedia.org/wiki/Probabilityhttp://en.wikipedia.org/wiki/Decision_theoryhttp://en.wikipedia.org/wiki/Decision_theoryhttp://en.wikipedia.org/wiki/Decision_theoryhttp://en.wikipedia.org/wiki/Probabilityhttp://en.wikipedia.org/wiki/Optimal_decisionhttp://en.wikipedia.org/wiki/Decision_tree -
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Capital investment decisions
Valuing flexibility
ROA is usually used when the value of a project is
contingenton the value of some other asset or
underlying variable. (For example, the viability of amining project is contingent on the price ofgold; if
the price is too low, management will abandon the
mining rights, if sufficiently high, management will
develop the ore body. Again, a DCFvaluation wouldcapture only one of these outcomes.)
14/4/2012 22adapted from Wikipedia
http://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Underlyinghttp://en.wikipedia.org/wiki/Economic_geologyhttp://en.wikipedia.org/wiki/Mininghttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Mineral_rightshttp://en.wikipedia.org/wiki/Underground_mining_(hard_rock)http://en.wikipedia.org/wiki/Orehttp://en.wikipedia.org/wiki/Orehttp://en.wikipedia.org/wiki/Underground_mining_(hard_rock)http://en.wikipedia.org/wiki/Mineral_rightshttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Mininghttp://en.wikipedia.org/wiki/Economic_geologyhttp://en.wikipedia.org/wiki/Underlyinghttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Contingent_claim_valuation -
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Capital investment decisions
Valuing flexibility
Here: (1) using financial option theory as a framework, the decision to be
taken is identified as corresponding to either a call option or a putoption;
(2) an appropriate valuation technique is then employed usually a
variant on the Binomial options model or a bespokesimulation model,while Black Scholes type formulae are used less often; see Contingent claim
valuation. (3) The "true" value of the project is then the NPV of the "most likely"
scenario plus the option value.
14/4/2012 23adapted from Wikipedia
http://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Call_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Binomial_options_modelhttp://en.wikipedia.org/wiki/Monte_Carlo_methods_in_financehttp://en.wikipedia.org/wiki/Black-Scholes_formulahttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Black-Scholes_formulahttp://en.wikipedia.org/wiki/Monte_Carlo_methods_in_financehttp://en.wikipedia.org/wiki/Binomial_options_modelhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Call_optionhttp://en.wikipedia.org/wiki/Option_(finance) -
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Capital investment decisions
Quantifying uncertainty
Using a related technique, analysts also run
scenario based forecasts of NPV. Here, a
scenario comprises a particular outcome for
economy-wide, "global" factors (demand for
the product, exchange rates, commodity
prices, etc...) as well as for company-specificfactors (unit costs, etc...).
14/4/2012 25adapted from Wikipedia
http://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Unit_costhttp://en.wikipedia.org/wiki/Unit_costhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Scenario_planning -
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Capital investment decisions
Quantifying uncertainty
A further advancement is to construct stochastic or probabilistic
financial models as opposed to the traditional static and
deterministic models as above.
For this purpose, the most common method is to use Monte Carlo
simulationto analyze the projects NPV.
This method was introduced to finance byDavid B. Hertz in 1964,although it has only recently become common: today analysts are
even able to run simulations in spreadsheet based DCF models,
typically using a risk-analysis add-in, such as @Riskor Crystal
Ball.
14/4/2012 26adapted from Wikipedia
http://en.wikipedia.org/wiki/Stochastichttp://en.wikipedia.org/wiki/Probabilistichttp://en.wikipedia.org/wiki/Deterministic_system_(mathematics)http://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/David_B._Hertzhttp://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/David_B._Hertzhttp://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/Deterministic_system_(mathematics)http://en.wikipedia.org/wiki/Probabilistichttp://en.wikipedia.org/wiki/Stochastic -
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Capital investment decisions
The financing decision Achieving the goals of corporate finance requires that any corporate
investment be financed appropriately.
The sources of financing are, generically, capital self-generated by
the firm and capital from external funders, obtained by issuing newdebt and equity (and hybrid- or convertible securities).
Since both hurdle rate and cash flows (and hence the riskiness of
the firm) will be affected, the financing mix will impact the
valuation of the firm (as well as the otherlong-term financialmanagement decisions).
14/4/2012 27adapted from Wikipedia
http://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Equity_investmenthttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Convertible_securityhttp://en.wikipedia.org/wiki/Convertible_securityhttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Equity_investmenthttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financing -
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Capital investment decisions
The financing decision
There are two interrelated decisions:
Management must identify the "optimal mix"
of financing
Management must attempt to match the long-
term financing mix to the assets being
financed as closely as possible, in terms of
both timing and cash flows
14/4/2012 28adapted from Wikipedia
http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Asset -
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Capital investment decisions
financing decision
Continuing the above example:
instead of assigning three discrete values to revenue
growth, and to the other relevant variables, theanalyst would assign an appropriate probability
distribution to each variable (commonly triangular or
beta), and, where possible, specify the observed or
supposed correlation between the variables
14/4/2012 29adapted from Wikipedia
http://en.wikipedia.org/wiki/Probability_distributionhttp://en.wikipedia.org/wiki/Probability_distributionhttp://en.wikipedia.org/wiki/Triangular_distributionhttp://en.wikipedia.org/wiki/Beta_distributionhttp://en.wikipedia.org/wiki/Correlationhttp://en.wikipedia.org/wiki/Correlationhttp://en.wikipedia.org/wiki/Beta_distributionhttp://en.wikipedia.org/wiki/Triangular_distributionhttp://en.wikipedia.org/wiki/Probability_distributionhttp://en.wikipedia.org/wiki/Probability_distribution -
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Capital investment decisions
The dividend decision
Whether to issue dividends,[17] and what amount, is
calculated mainly on the basis of the company's
unappropriated profit and its earning prospects forthe coming year.
The amount is also often calculated based on
expectedfree cash flows i.e. cash remaining after all
business expenses, and capital investment needs
have been met
14/4/2012 30adapted from Wikipedia
http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Profit_(accounting) -
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Capital investment decisions
Corporate finance theory and research
Most of the MBA level corporate finance falls under
the umbrella of the Trade-Off Theory in which firms
are assumed to trade-off the tax benefits of debtwith the bankruptcy costs of debt when making their
decisions.
However economists have developed a set of
alternative theories about financing decisions
14/4/2012 31adapted from Wikipedia
http://en.wikipedia.org/wiki/Trade-Off_Theoryhttp://en.wikipedia.org/wiki/Tax_benefits_of_debthttp://en.wikipedia.org/wiki/Bankruptcy_costs_of_debthttp://en.wikipedia.org/wiki/Bankruptcy_costs_of_debthttp://en.wikipedia.org/wiki/Tax_benefits_of_debthttp://en.wikipedia.org/wiki/Trade-Off_Theoryhttp://en.wikipedia.org/wiki/Trade-Off_Theoryhttp://en.wikipedia.org/wiki/Trade-Off_Theory -
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Capital investment decisions
Corporate finance theory and research
alternative theories of how firms make their
financing decisions
-thePecking Order Theory (Stewart Myers)
-the,Capital structure substitution theory
-the Market timing hypothesis
14/4/2012 32adapted from Wikipedia
http://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Stewart_Myershttp://wiki/Capital_structure_substitution_theoryhttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theory -
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Working capital management
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Working capital management
Decisions relating to working capital and short
term financing are referred to as working
capital management
These involve managing the relationship
between a firm's short-term assets and its
short-term liabilities
14/4/2012 34adapted from Wikipedia
http://en.wikipedia.org/wiki/Working_capitalhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Working_capital -
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Working capital management
Decision criteria:
Working capital is the amount of capital which
is readily available to an organization. That is,
working capital is the difference between
resources in cash or readily convertible into
cash (Current Assets), and cash requirements
(Current Liabilities). As a result, the decisionsrelating to working capital are always current ,
i.e. short term.
14/4/2012 35adapted from Wikipedia
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Working capital management
Working capital management decisions are
therefore not taken on the same basis as long
term decisions, and working capital
management applies different criteria indecision making: the main considerations are:
(1) cash flow / liquidity and
(2) profitability / return on capital (of which cashflow is probably the most important
14/4/2012 36adapted from Wikipedia
http://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Decision_making -
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Working capital management
Management of working capital
Guided by the above criteria, management
will use a combination of policies and
techniques for the management of working
capital. These policies aim at managing the
current assets (generally cash and cash
equivalents, inventories and debtors) and theshort term financing, such that cash flows and
returns are acceptable
14/4/2012 37adapted from Wikipedia
http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Debtorhttp://en.wikipedia.org/wiki/Debtorhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Asset -
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Relationship with other areas in
finance
14/4/2012 adapted from Wikipedia 38
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Relationship with other areas in
financeInvestment banking Use of the term corporate finance varies
considerably across the world.
In the United States it is used, as above, to describe
activities, decisions and techniques that deal with
many aspects of a companys finances and capital.
In the United Kingdom and Commonwealth
countries, the terms corporate finance andcorporate financier tend to be associated with
investment banking i.e. with transactions in which
capital is raised for the corporation
14/4/2012 39adapted from Wikipedia
l h h h
http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Commonwealth_of_Nationshttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Commonwealth_of_Nationshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_States -
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Relationship with other areas in
finance
Financial risk management
Risk management is the process of measuring risk and then
developing and implementing strategies to manage ("hedge")
that risk.
Financial risk management, typically, is focused on the impact
on corporate value due to adverse changes in commodity
prices, interest rates, foreign exchange rates andstock prices
(market risk). It will also play an important role in short termcash- and treasury management
14/4/2012 40adapted from Wikipedia
l i hi i h h i
http://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Financial_risk_managementhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Treasury_managementhttp://en.wikipedia.org/wiki/Treasury_managementhttp://en.wikipedia.org/wiki/Treasury_managementhttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Financial_risk_managementhttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Risk_management -
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Relationship with other areas in
finance
This area or risk is related to corporate finance
in two ways:
Firstly, firm exposure to business and market
risk is a direct result of previous Investment
and Financing decisions.
Secondly, both disciplines share the goal of
enhancing, or preserving, firm value.
14/4/2012 41adapted from Wikipedia
l i hi i h h i
http://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Market_risk -
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Relationship with other areas in
finance
14/4/2012 adapted from Wikipedia 42
Personal and public finance
Corporate finance utilizes tools from almost all
areas of finance. Some of the tools developed
by and for corporations have broad
application to entities other than
corporations, for example,
to partnerships, sole proprietorships, not-for-profit organizations, governments, mutual funds,
and personal wealth management
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Alternate Approaches
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Alternate Approaches
The approaches standard assumption in Corporate finance is that shareholders are the
residual claimants and that the primary goal of executives should be to
maximizeshareholder value.
Recently, however, legal scholars (e.g. Lynn Stout [23]) have questionedthis assumption, implyingthat the assumed goal of maximizing
shareholder value is inappropriatefor a public corporation. This criticism in turn brings into question the advice of corporate finance,
particularly related to stock buybacks made purportedly to "return value
to shareholders," which ispredicated on a legally erroneous assumption
14/4/2012 44adapted from Wikipedia
http://en.wikipedia.org/wiki/Shareholder_valuehttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Lynn_Stouthttp://en.wikipedia.org/wiki/Lynn_Stouthttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Shareholder_value -
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See also
Lists: List of accounting topics
List of finance topics
List of corporate finance topics
List of valuation topics
Business organizations
Financial modeling
Financial planning
Investment bank
Venture capital
Right-financing
Factoring (finance)
14/4/2012 45adapted from Wikipedia
http://en.wikipedia.org/wiki/List_of_accounting_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/Business_organizationshttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_planninghttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Factoring_(finance)http://en.wikipedia.org/wiki/Factoring_(finance)http://en.wikipedia.org/wiki/Factoring_(finance)http://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Financial_planninghttp://en.wikipedia.org/wiki/Financial_planninghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Business_organizationshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_accounting_topicshttp://en.wikipedia.org/wiki/List_of_accounting_topics -
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References
14/4/2012 adapted from Wikipedia 46
http://wiki/Investment_bankinghttp://wiki/Investment_banking -
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Corporate finance and investment banking
Capital structureSenior secured debt Senior debt Second lien debt Subordinated debt Mezzanine debt ConvertibledebtExchangeable debtPreferred equityWarrantShareholder loanCommon equityPari passu
/wiki/File:Met_life_tower_crop.jpg/wiki/File:Met_life_tower_crop.jpg
Transactions(terms / conditions)
Equity offeringsInitial public offering (IPO) Secondary market offering (SEO) Follow-on offering Rights issue PrivateplacementSpin outEquity carve-outGreenshoe (Reverse) Book buildingBookrunnerUnderwriterMergers andacquisitionsTakeoverReverse takeoverTender offerProxy fightPoison pillStaggered boardSqueeze outTag-alongright Drag-along right Pre-emption right Control premium Due diligence Divestment Sell side Buy side DemergerSuper-majorityPitch book
Leverage
Leveraged buyout Leveraged recap Financial sponsor Private equity Bond offering High-yield debt DIPfinancingProject financeDebt restructuring
Financial modelingFree cash flowBusiness valuationFairness opinionStock valuationAPVDCFNet present value (NPV)Cost of capital (Weighted average) Comparable company analysisAccretion/dilution analysisEnterprise valueTax shieldMinority interestAssociate companyEVAMVATerminal valueReal options valuation
References
http://wiki/Investment_bankinghttp://wiki/Secured_loanhttp://wiki/Senior_debthttp://wiki/Second_lien_loanhttp://wiki/Subordinated_debthttp://wiki/Mezzanine_capitalhttp://wiki/Convertible_bondhttp://wiki/Convertible_bondhttp://wiki/Exchangeable_bondhttp://wiki/Preferred_stockhttp://wiki/Warrant_(finance)http://wiki/Shareholder_loanhttp://wiki/Stockhttp://wiki/Pari_passuhttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/Stockhttp://wiki/Initial_public_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Rights_issuehttp://wiki/Private_placementhttp://wiki/Private_placementhttp://wiki/Spin_outhttp://wiki/Equity_carve-outhttp://wiki/Greenshoehttp://wiki/Reverse_greenshoehttp://wiki/Book_buildinghttp://wiki/Bookrunnerhttp://wiki/Underwriterhttp://wiki/Mergers_and_acquisitionshttp://wiki/Takeoverhttp://wiki/Reverse_takeoverhttp://wiki/Tender_offerhttp://wiki/Proxy_fighthttp://wiki/Poison_pillhttp://wiki/Staggered_board_of_directorshttp://wiki/Squeeze_outhttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Drag-along_righthttp://wiki/Pre-emption_righthttp://wiki/Control_premiumhttp://wiki/Management_due_diligencehttp://wiki/Divestmenthttp://wiki/Sell_sidehttp://wiki/Buy_sidehttp://wiki/Demergerhttp://wiki/Super-majority_amendmenthttp://wiki/Pitch_bookhttp://wiki/Leverage_(finance)http://wiki/Leveraged_buyouthttp://wiki/Leveraged_recapitalizationhttp://wiki/Financial_sponsorhttp://wiki/Private_equityhttp://wiki/Bond_(finance)http://wiki/High-yield_debthttp://wiki/Debtor-in-possession_financinghttp://wiki/Debtor-in-possession_financinghttp://wiki/Project_financehttp://wiki/Debt_restructuringhttp://wiki/Financial_modelinghttp://wiki/Free_cash_flowhttp://wiki/Business_valuationhttp://wiki/Fairness_opinionhttp://wiki/Stock_valuationhttp://wiki/Adjusted_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Net_present_valuehttp://wiki/Cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Valuation_using_multipleshttp://wiki/Accretion/dilution_analysishttp://wiki/Enterprise_valuehttp://wiki/Tax_shieldhttp://wiki/Minority_interesthttp://wiki/Associate_companyhttp://wiki/Economic_Value_Addedhttp://wiki/Market_value_addedhttp://wiki/Terminal_value_(finance)http://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Terminal_value_(finance)http://wiki/Terminal_value_(finance)http://wiki/Terminal_value_(finance)http://wiki/Market_value_addedhttp://wiki/Economic_Value_Addedhttp://wiki/Associate_companyhttp://wiki/Associate_companyhttp://wiki/Associate_companyhttp://wiki/Minority_interesthttp://wiki/Minority_interesthttp://wiki/Minority_interesthttp://wiki/Tax_shieldhttp://wiki/Tax_shieldhttp://wiki/Tax_shieldhttp://wiki/Enterprise_valuehttp://wiki/Enterprise_valuehttp://wiki/Enterprise_valuehttp://wiki/Accretion/dilution_analysishttp://wiki/Accretion/dilution_analysishttp://wiki/Accretion/dilution_analysishttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Adjusted_present_valuehttp://wiki/Stock_valuationhttp://wiki/Stock_valuationhttp://wiki/Stock_valuationhttp://wiki/Fairness_opinionhttp://wiki/Fairness_opinionhttp://wiki/Fairness_opinionhttp://wiki/Business_valuationhttp://wiki/Business_valuationhttp://wiki/Business_valuationhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Financial_modelinghttp://wiki/Financial_modelinghttp://wiki/Financial_modelinghttp://wiki/Debt_restructuringhttp://wiki/Debt_restructuringhttp://wiki/Debt_restructuringhttp://wiki/Debt_restructuringhttp://wiki/Project_financehttp://wiki/Project_financehttp://wiki/Project_financehttp://wiki/Debtor-in-possession_financinghttp://wiki/Debtor-in-possession_financinghttp://wiki/Debtor-in-possession_financinghttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/Bond_(finance)http://wiki/Bond_(finance)http://wiki/Bond_(finance)http://wiki/Private_equityhttp://wiki/Private_equityhttp://wiki/Private_equityhttp://wiki/Financial_sponsorhttp://wiki/Financial_sponsorhttp://wiki/Financial_sponsorhttp://wiki/Leveraged_recapitalizationhttp://wiki/Leveraged_recapitalizationhttp://wiki/Leveraged_recapitalizationhttp://wiki/Leveraged_buyouthttp://wiki/Leveraged_buyouthttp://wiki/Leveraged_buyouthttp://wiki/Leverage_(finance)http://wiki/Pitch_bookhttp://wiki/Pitch_bookhttp://wiki/Pitch_bookhttp://wiki/Pitch_bookhttp://wiki/Super-majority_amendmenthttp://wiki/Super-majority_amendmenthttp://wiki/Super-majority_amendmenthttp://wiki/Demergerhttp://wiki/Buy_sidehttp://wiki/Buy_sidehttp://wiki/Buy_sidehttp://wiki/Sell_sidehttp://wiki/Sell_sidehttp://wiki/Sell_sidehttp://wiki/Divestmenthttp://wiki/Management_due_diligencehttp://wiki/Management_due_diligencehttp://wiki/Management_due_diligencehttp://wiki/Control_premiumhttp://wiki/Control_premiumhttp://wiki/Control_premiumhttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Squeeze_outhttp://wiki/Squeeze_outhttp://wiki/Squeeze_outhttp://wiki/Staggered_board_of_directorshttp://wiki/Staggered_board_of_directorshttp://wiki/Staggered_board_of_directorshttp://wiki/Poison_pillhttp://wiki/Poison_pillhttp://wiki/Poison_pillhttp://wiki/Proxy_fighthttp://wiki/Proxy_fighthttp://wiki/Proxy_fighthttp://wiki/Tender_offerhttp://wiki/Tender_offerhttp://wiki/Tender_offerhttp://wiki/Reverse_takeoverhttp://wiki/Reverse_takeoverhttp://wiki/Reverse_takeoverhttp://wiki/Takeoverhttp://wiki/Mergers_and_acquisitionshttp://wiki/Mergers_and_acquisitionshttp://wiki/Mergers_and_acquisitionshttp://wiki/Mergers_and_acquisitionshttp://wiki/Underwriterhttp://wiki/Underwriterhttp://wiki/Bookrunnerhttp://wiki/Book_buildinghttp://wiki/Book_buildinghttp://wiki/Book_buildinghttp://wiki/Reverse_greenshoehttp://wiki/Greenshoehttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Spin_outhttp://wiki/Spin_outhttp://wiki/Spin_outhttp://wiki/Private_placementhttp://wiki/Private_placementhttp://wiki/Private_placementhttp://wiki/Rights_issuehttp://wiki/Rights_issuehttp://wiki/Rights_issuehttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/Pari_passuhttp://wiki/Pari_passuhttp://wiki/Pari_passuhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Shareholder_loanhttp://wiki/Shareholder_loanhttp://wiki/Shareholder_loanhttp://wiki/Warrant_(finance)http://wiki/Preferred_stockhttp://wiki/Preferred_stockhttp://wiki/Preferred_stockhttp://wiki/Exchangeable_bondhttp://wiki/Exchangeable_bondhttp://wiki/Exchangeable_bondhttp://wiki/Convertible_bondhttp://wiki/Convertible_bondhttp://wiki/Convertible_bondhttp://wiki/Mezzanine_capitalhttp://wiki/Mezzanine_capitalhttp://wiki/Mezzanine_capitalhttp://wiki/Subordinated_debthttp://wiki/Subordinated_debthttp://wiki/Subordinated_debthttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Senior_debthttp://wiki/Senior_debthttp://wiki/Senior_debthttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Investment_bankinghttp://wiki/Investment_banking 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References
Corporate Finance: First Principles, Aswath Damodaran, New York University's Stern School of Business^ The
framework for this section is based on Notes by Aswath Damodaran at New York University's Stern School of Business^
See: Investment Decisions and Capital Budgeting, Prof. Campbell R. Harvey; The Investment Decision of the
Corporation, Prof. Don M. Chance ^ See: Valuation, Prof. Aswath Damodaran; Equity Valuation, Prof. Campbell R.
Harvey ^ See for example Campbell R. Harvey's Hypertextual Finance Glossary or investopedia.com^ See: Real
Options Analysis and the Assumptions of the NPV Rule, Tom Arnold & Richard Shockley ^ See: Decision Tree Analysis,
mindtools.com; Decision Tree Primer, Prof. Craig W. Kirkwood Arizona State University ^ ab See: "Capital Budgeting
Under Risk". Ch.9 in Schaum's outline of theory and problems of financial management, Jae K. Shim and Joel G. Siegel.^ See:Identifying real options, Prof. Campbell R. Harvey; Applications of option pricing theory to equity valuation, Prof.Aswath Damodaran; How Do You Assess The Value of A Company's "Real Options"? , Prof. Alfred Rappaport Columbia
University & Michael Mauboussin ^ ab See Probabilistic Approaches: Scenario Analysis, Decision Trees and
Simulations, Prof. Aswath Damodaran ^ For example, mining companiessometimes employ the Hill of Valuemethodology in their planning; see, e.g., B. E. Hall, "How Mining Companies Improve Share Price by Destroying
Shareholder Value"^ See: Quantifying Corporate Financial Risk, David Shimko. ^The Flaw of Averages, Prof. Sam
Savage, Stanford University. ^ See: The Financing Decision of the Corporation, Prof. Don M. Chance; Capital Structure,
Prof. Aswath Damodaran ^Capital Structure: Implications, Prof. John C. Groth, Texas A&M University; A GeneralisedProcedure for Locating the Optimal Capital Structure, Ruben D. Cohen, Citigroup^ See:Optimal Balance of Financial
Instruments: Long-Term Management, Market Volatility & Proposed Changes, Nishant Choudhary, LL.M. 2011
(Business & finance), George Washington University Law School ^ See Dividend Policy, Prof. Aswath Damodaran ^ See
The theory of Corporate Finance, Princeton University Press^ See Working Capital Management, Studyfinance.com;
Working Capital Management, treasury.govt.nz^
See The 20 Principles of Financial Management, Prof. Don M. Chance,Louisiana State University^ Beaney, Shaun, "Defining corporate finance in the UK", Corporate Finance Faculty,
ICAEW, April 2005 (revised January 2011) ^ See: Global Association of Risk Professionals (GARP); Professional Risk
Managers' International Association (PRMIA)^Lynn A. Stout (2002). Bad and Not-So-Bad Arguments for Shareholder
Primacy, University of California, Los Angeles School of Law Research Paper No. 25; Lynn A. Stout (2007). The
Mythical Benefits of Shareholder Control, REGULATIONSpring 2007
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://wiki/Aswath_Damodaranhttp://wiki/New_York_Universityhttp://wiki/Stern_School_of_Businesshttp://l%20%22cite_ref-1/http://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://wiki/Aswath_Damodaranhttp://wiki/New_York_Universityhttp://wiki/Stern_School_of_Businesshttp://l%20%22cite_ref-2/http://www.duke.edu/~charvey/Classes/ba350_1997/vcf2/vcf2.htmhttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://l%20%22cite_ref-3/http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/val.htmlhttp://www.duke.edu/~charvey/Classes/ba350_1997/vcf1/vcf1.htmhttp://l%20%22cite_ref-4/http://biz.yahoo.com/f/g/hh.htmlhttp://www.investopedia.com/terms/h/hurdlerate.asphttp://l%20%22cite_ref-5/http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://l%20%22cite_ref-6/http://www.mindtools.com/pages/article/newTED_04.htmhttp://www.public.asu.edu/~kirkwood/DAStuff/decisiontrees/index.htmlhttp://wiki/Arizona_State_Universityhttp://l%20%22cite_ref-shim_.26_siegel_7-0/http://l%20%22cite_ref-shim_.26_siegel_7-1/http://books.google.com/books?id=_lnmxnhoAUEC&printsec=frontcover&dq=related:ISBN0070580316%22%20/l%20%22v=onepage&q&f=falsehttp://l%20%22cite_ref-8/http://faculty.fuqua.duke.edu/~charvey/Teaching/BA456_2002/Identifying_real_options.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/opt.htmlhttp://www.expectationsinvesting.com/tutorial11.shtmlhttp://wiki/Columbia_Universityhttp://wiki/Columbia_Universityhttp://wiki/Michael_Mauboussinhttp://l%20%22cite_ref-damodaran_risk_9-0/http://l%20%22cite_ref-damodaran_risk_9-1/http://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://l%20%22cite_ref-10/http://wiki/Category:Mining_companieshttps://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438https://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438http://l%20%22cite_ref-shimko_11-0/http://www.qfinance.com/financial-risk-management-best-practice/quantifying-corporate-financial-risk?fullhttp://l%20%22cite_ref-savage_12-0/http://www.analycorp.com/uncertainty/flawarticle.htmhttp://wiki/Stanford_Universityhttp://l%20%22cite_ref-13/http://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22256,1,Slidehttp://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/capstr.pdfhttp://l%20%22cite_ref-14/http://www.qfinance.com/mergers-and-acquisitions-best-practice/capital-structure-implications?fullhttp://wiki/Texas_A%26M_Universityhttp://rdcohen.50megs.com/genOCS.pdfhttp://rdcohen.50megs.com/genOCS.pdfhttp://wiki/Citigrouphttp://l%20%22cite_ref-15/http://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://l%20%22cite_ref-16/http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/divid.pdfhttp://l%20%22cite_ref-17/http://press.princeton.edu/titles/8123.htmlhttp://wiki/Princeton_University_Presshttp://l%20%22cite_ref-18/http://www.studyfinance.com/lessons/workcap/index.mvhttp://www.treasury.govt.nz/publicsector/workingcapital/chap2.asphttp://l%20%22cite_ref-19/http://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/PrinciplesofFinancialManagement.htmhttp://wiki/Louisiana_State_Universityhttp://l%20%22cite_ref-20/http://www.icaew.com/en/technical/corporate-finance/corporate-finance-faculty/what-is-corporate-finance-122299http://l%20%22cite_ref-21/http://www.garp.com/http://www.primia.org/http://www.primia.org/http://l%20%22cite_ref-22/http://wiki/Lynn_Stouthttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://wiki/University_of_California,_Los_Angeleshttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://wiki/University_of_California,_Los_Angeleshttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://wiki/Lynn_Stouthttp://l%20%22cite_ref-22/http://www.primia.org/http://www.primia.org/http://www.garp.com/http://l%20%22cite_ref-21/http://www.icaew.com/en/technical/corporate-finance/corporate-finance-faculty/what-is-corporate-finance-122299http://l%20%22cite_ref-20/http://wiki/Louisiana_State_Universityhttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/PrinciplesofFinancialManagement.htmhttp://l%20%22cite_ref-19/http://www.treasury.govt.nz/publicsector/workingcapital/chap2.asphttp://www.studyfinance.com/lessons/workcap/index.mvhttp://l%20%22cite_ref-18/http://wiki/Princeton_University_Presshttp://press.princeton.edu/titles/8123.htmlhttp://l%20%22cite_ref-17/http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/divid.pdfhttp://l%20%22cite_ref-16/http://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://l%20%22cite_ref-15/http://wiki/Citigrouphttp://rdcohen.50megs.com/genOCS.pdfhttp://rdcohen.50megs.com/genOCS.pdfhttp://wiki/Texas_A%26M_Universityhttp://www.qfinance.com/mergers-and-acquisitions-best-practice/capital-structure-implications?fullhttp://l%20%22cite_ref-14/http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/capstr.pdfhttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22256,1,Slidehttp://l%20%22cite_ref-13/http://wiki/Stanford_Universityhttp://www.analycorp.com/uncertainty/flawarticle.htmhttp://l%20%22cite_ref-savage_12-0/http://www.qfinance.com/financial-risk-management-best-practice/quantifying-corporate-financial-risk?fullhttp://l%20%22cite_ref-shimko_11-0/https://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438https://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438http://wiki/Category:Mining_companieshttp://l%20%22cite_ref-10/http://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://l%20%22cite_ref-damodaran_risk_9-1/http://l%20%22cite_ref-damodaran_risk_9-0/http://wiki/Michael_Mauboussinhttp://wiki/Columbia_Universityhttp://wiki/Columbia_Universityhttp://www.expectationsinvesting.com/tutorial11.shtmlhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/opt.htmlhttp://faculty.fuqua.duke.edu/~charvey/Teaching/BA456_2002/Identifying_real_options.htmhttp://l%20%22cite_ref-8/http://books.google.com/books?id=_lnmxnhoAUEC&printsec=frontcover&dq=related:ISBN0070580316%22%20/l%20%22v=onepage&q&f=falsehttp://l%20%22cite_ref-shim_.26_siegel_7-1/http://l%20%22cite_ref-shim_.26_siegel_7-0/http://wiki/Arizona_State_Universityhttp://www.public.asu.edu/~kirkwood/DAStuff/decisiontrees/index.htmlhttp://www.mindtools.com/pages/article/newTED_04.htmhttp://l%20%22cite_ref-6/http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://l%20%22cite_ref-5/http://www.investopedia.com/terms/h/hurdlerate.asphttp://biz.yahoo.com/f/g/hh.htmlhttp://l%20%22cite_ref-4/http://www.duke.edu/~charvey/Classes/ba350_1997/vcf1/vcf1.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/val.htmlhttp://l%20%22cite_ref-3/http://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://www.duke.edu/~charvey/Classes/ba350_1997/vcf2/vcf2.htmhttp://l%20%22cite_ref-2/http://wiki/Stern_School_of_Businesshttp://wiki/New_York_Universityhttp://wiki/Aswath_Damodaranhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://l%20%22cite_ref-1/http://wiki/Stern_School_of_Businesshttp://wiki/New_York_Universityhttp://wiki/Aswath_Damodaranhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://wiki/Financial_modeling 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Financial modelingFree cash flow
Business valuation
Fairness opinionStock valuation
APVDCF
Net present value (NPV)Cost of capital (Weighted average)
Comparable company analysisAccretion/dilution analysis
Enterprise valueTax shield
Minority interest
Associate companyEVAMVA
Terminal valueReal options valuation
Corporate finance and investment banking
http://wiki/Financial_modelinghttp://wiki/Free_cash_flowhttp://wiki/Business_valuationhttp://wiki/Fairness_opinionhttp://wiki/Stock_valuationhttp://wiki/Adjusted_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Net_present_valuehttp://wiki/Cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Valuation_using_multipleshttp://wiki/Accretion/dilution_analysishttp://wiki/Enterprise_valuehttp://wiki/Tax_shieldhttp://wiki/Minority_interesthttp://wiki/Associate_companyhttp://wiki/Economic_Value_Addedhttp://wiki/Market_value_addedhttp://wiki/Terminal_value_(finance)http://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Terminal_value_(finance)http://wiki/Market_value_addedhttp://wiki/Market_value_addedhttp://wiki/Economic_Value_Addedhttp://wiki/Associate_companyhttp://wiki/Associate_companyhttp://wiki/Minority_interesthttp://wiki/Tax_shieldhttp://wiki/Tax_shieldhttp://wiki/Enterprise_valuehttp://wiki/Enterprise_valuehttp://wiki/Accretion/dilution_analysishttp://wiki/Accretion/dilution_analysishttp://wiki/Valuation_using_multipleshttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Net_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Adjusted_present_valuehttp://wiki/Stock_valuationhttp://wiki/Fairness_opinionhttp://wiki/Business_valuationhttp://wiki/Free_cash_flowhttp://wiki/Financial_modelinghttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_banking -
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Corporate finance and investment banking1. Capital structure
Senior secured debtSenior debtSecond lien debtSubordinated debtMezzanine debt
Convertible debtPreferred equityWarrantShareholder loanCommon equityPari passu
2. Transactions(terms / conditions)Equity offerings. Initial public offering (IPO) Secondary market offering (SEO)
Follow-on offeringRights issuePrivate placementSpin outEquity carve-out Greenshoe
(Reverse) Book buildingBookrunnerUnderwriter
Mergers andacquisitions.TakeoverReverse takeoverTender offerProxy fight Poison
pillStaggered board Squeeze outTag-along rightDrag-along rightPre-emption rightControl premiumDue diligenceDivestmentSell side Buy sideDemergerSuper-
majorityPitch book
Leverage .Leveraged buyoutLeveraged recapFinancial sponsorPrivate equity Bond
offeringHigh-yield debtDIP financingProject finance Debt restructuring
3.Valuation
.Financial modelingFree cash flowBusiness valuationFairness opinionStock valuationAPV
DCF Net present value (NPV) Cost of capital (Weighted average) Comparable company
analysisAccretion/dilution analysisEnterprise valueTax shieldMinority interestAssociate
companyEVAMVATerminal valueReal options valuation
14/4/2012 50adapted from Wikipedia
http://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Secured_loanhttp://en.wikipedia.org/wiki/Senior_debthttp://en.wikipedia.org/wiki/Second_lien_loanhttp://en.wikipedia.org/wiki/Subordinated_debthttp://en.wikipedia.org/wiki/Mezzanine_capitalhttp://en.wikipedia.org/wiki/Convertible_bondhttp://en.wikipedia.org/wiki/Preferred_stockhttp://en.wikipedia.org/wiki/Warrant_(finance)http://en.wikipedia.org/wiki/Shareholder_loanhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Pari_passuhttp://wiki/Stockhttp://wiki/Initial_public_offeringhttp://wiki/Secondary_market_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Rights_issuehttp://en.wikipedia.org/wiki/Private_placementhttp://en.wikipedia.org/wiki/Spin_outhttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Greenshoehttp://en.wikipedia.org/wiki/Reverse_greenshoehttp://en.wikipedia.org/wiki/Book_buildinghttp://en.wikipedia.org/wiki/Bookrunnerhttp://en.wikipedia.org/wiki/Underwriterhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Reverse_takeoverhttp://en.wikipedia.org/wiki/Tender_offerhttp://en.wikipedia.org/wiki/Proxy_fighthttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Staggered_board_of_directorshttp://en.wikipedia.org/wiki/Squeeze_outhttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Control_premiumhttp://en.wikipedia.org/wiki/Management_due_diligencehttp://en.wikipedia.org/wiki/Divestmenthttp://en.wikipedia.org/wiki/Sell_sidehttp://en.wikipedia.org/wiki/Buy_sidehttp://en.wikipedia.org/wiki/Demergerhttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Pitch_bookhttp://en.wikipedia.org/wiki/Leverage_(finance)http://en.wikipedia.org/wiki/Leveraged_buyouthttp://en.wikipedia.org/wiki/Leveraged_recapitalizationhttp://en.wikipedia.org/wiki/Financial_sponsorhttp://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/Debtor-in-possession_financinghttp://en.wikipedia.org/wiki/Project_financehttp://en.wikipedia.org/wiki/Debt_restructuringhttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Economic_Value_Addedhttp://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Economic_Value_Addedhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Debt_restructuringhttp://en.wikipedia.org/wiki/Debt_restructuringhttp://en.wikipedia.org/wiki/Project_financehttp://en.wikipedia.org/wiki/Debtor-in-possession_financinghttp://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Financial_sponsorhttp://en.wikipedia.org/wiki/Leveraged_recapitalizationhttp://en.wikipedia.org/wiki/Leveraged_buyouthttp://en.wikipedia.org/wiki/Leverage_(finance)http://en.wikipedia.org/wiki/Pitch_bookhttp://en.wikipedia.org/wiki/Pitch_bookhttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Demergerhttp://en.wikipedia.org/wiki/Buy_sidehttp://en.wikipedia.org/wiki/Sell_sidehttp://en.wikipedia.org/wiki/Divestmenthttp://en.wikipedia.org/wiki/Management_due_diligencehttp://en.wikipedia.org/wiki/Control_premiumhttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Squeeze_outhttp://en.wikipedia.org/wiki/Staggered_board_of_directorshttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Proxy_fighthttp://en.wikipedia.org/wiki/Tender_offerhttp://en.wikipedia.org/wiki/Reverse_takeoverhttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Underwriterhttp://en.wikipedia.org/wiki/Underwriterhttp://en.wikipedia.org/wiki/Bookrunnerhttp://en.wikipedia.org/wiki/Book_buildinghttp://en.wikipedia.org/wiki/Reverse_greenshoehttp://en.wikipedia.org/wiki/Greenshoehttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Spin_outhttp://en.wikipedia.org/wiki/Private_placementhttp://en.wikipedia.org/wiki/Rights_issuehttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Stockhttp://en.wikipedia.org/wiki/Pari_passuhttp://en.wikipedia.org/wiki/Pari_passuhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Shareholder_loanhttp://en.wikipedia.org/wiki/Warrant_(finance)http://en.wikipedia.org/wiki/Preferred_stockhttp://en.wikipedia.org/wiki/Convertible_bondhttp://en.wikipedia.org/wiki/Mezzanine_capitalhttp://en.wikipedia.org/wiki/Subordinated_debthttp://en.wikipedia.org/wiki/Second_lien_loanhttp://en.wikipedia.org/wiki/Senior_debthttp://en.wikipedia.org/wiki/Secured_loanhttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_banking 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8/2/2019 Corporate Finanial Managemnt
51/51
END