investment banking and the private firm prof. ian giddy stern school of business new york university

Investment Bankingand The Private Firm

Prof. Ian GIDDYStern School of Business

New York University

Topics:- Leveraged Buyouts and Venture Capital- Initial Public Offerings- Valuing a Business- Realizing Value from a Private Company

Copyright ©2003 Ian H. Giddy Introduction 4

Corporate Finance

CORPORATE FINANCE

DECISONS

CORPORATE FINANCE

DECISONS

INVESTMENTINVESTMENT RISK MGTRISK MGTFINANCINGFINANCING

CAPITAL

PORTFOLIO

M&ADEBT EQUITY

TOOLS

MEASUREMENT

Leveraged Finance

Prof. Ian GiddyNew York University


Leveraged Financing

Leveraged Finance is the provision of bank loans and the issue of high yield bonds to fund acquisitions of companies or parts of companies by

an existing internal management team (a management buy-out),

an external management team (a management buy-in), or

a third party (a leveraged acquisition).


Leveraged Finance is For Companies with Unused Debt Capacity

Leveraged buyout?

Company has

unused debt

capacity Leveraged

recapitalization?

Takeover?


Typical LBO Sequence

Company gets bloated or slack and stock price falls

LBO offer made

LBO completed

Restructuring Efficiencies Divestitures Financial

? years 3-9 months 5-7 years

IPO or sale of company

LBO financing lined up


LBO: A Temporary Capital Structure

COST

OF

CAPITAL

DEBT

RATIO

Stage 1: Pre-LBO

Stage 4: Debt paydown

Stage 2: LBO financing

Stage 3: LBO refinancing


12-Step Method

Evaluating cost of deal Estimating borrowing capacity Estimating cash costs of funding Estimating growth rates of sales, expenses,

etc Projecting cash flows (FCFF and FCFE) Projecting debt amortization Calculating terminal value of FCFE and FCFF Estimating costs of capital to find PV Making sense of the deal


Cost of the Deal

Estimating cost of deal

Shares 10Price 45$ Premium 15%Equity cost 518$ Debt cost 55$ Fees 5% 29$ Capex & restructuring 10% 57$ Total cost of deal 658$

lbocapacity.xls


Borrowing Capacity

Estimating borrowing capacity

Given:EBIT 95$ Min EBIT int coverage ratio 1.3Interest capacity 73$ Interest rate 16.00%Debt capacity 457$

From table

lbocapacity.xls


Cost of Debt

Estimating the cost of debtEnter the type of firm = 2 (1 if large manufacturing firm, 2 if smaller or riskier firm)EBIT 95$ Current interest expenses = 73$ Current long term government bond rate = 0.06OutputInterest coverage ratio = 1.3Estimated Bond Rating = CCCEstimated Default Spread = 10%Estimated Cost of Debt = 16%

For large manufacturing firms For smaller and risk ier firmsIf interest coverage ratio is If interest coverage ratio is> ≤ Rating is Spread is > ≤ Rating is Spread is

-100000 0.199999 D 0.14 -100000 0.499999 D 0.140.2 0.649999 C 0.127 0.5 0.799999 C 0.127

0.65 0.799999 CC 0.115 0.8 1.249999 CC 0.1150.8 1.249999 CCC 0.1 1.25 1.499999 CCC 0.1

1.25 1.499999 B- 0.08 1.5 1.999999 B- 0.081.5 1.749999 B 0.065 2 2.499999 B 0.065

1.75 1.999999 B+ 0.0475 2.5 2.999999 B+ 0.04752 2.499999 BB 0.035 3 3.499999 BB 0.035

2.5 2.999999 BBB 0.0225 3.5 4.499999 BBB 0.02253 4.249999 A- 0.02 4.5 5.999999 A- 0.02

4.25 5.499999 A 0.018 6 7.499999 A 0.0185.5 6.499999 A+ 0.015 7.5 9.499999 A+ 0.0156.5 8.499999 AA 0.01 9.5 12.5 AA 0.018.5 100000 AAA 0.0075 12.5 100000 AAA 0.0075lbocapacity.xls


Capital Structure

Preliminary capital structure

Debt 457$ Missing 177$ Mgt equity 25$ Total financing 658$

lbocapacity.xls


LBO Financing

NEWCO

Cost of

purchasing

the

business Equity $25

Senior

debt $457 What securities?

What returns?

What investors?Mezzanine


Mezzanine

Asset-backed or cash flow-backed debt Senior debt Subordinated debt with high yield Subordinated debt with upside

participation Subordinated debt with equity option Preferred equity with warrants or

conversion options Restricted shares Common stock


Why Venture Capitalists Prefer Preferred

Senior status in bankruptcy Does not put a value on the shares Is convertible into common stock before

the IPO Conversion price is set such that if there

is a liquidation all the money goes to the preferred shareholders (equity is worth zero)


Cash Flows and Debt Repayment

Cash Flows and debt repayment0 1 2 3 4 5

EBIT 110$ 117 124 131 135Borrowed 437$ Interest 61 52 42 31 18 Tax 35% 17 22 28 35 41 Add depr - Capex 30 30 30 30 30Cash avail to repay debt 62 72 83 95 106 Remaining debt 375 303 220 125 19


Exit

Company gets bloated or slack and stock price falls

LBO offer made

LBO completed

Restructuring Efficiencies Divestitures Financial

? years 3-9 months 5-7 years

IPO or sale of company

LBO financing lined up

0 1 2 3 4 5IPO @ 6xEBIT 810VCs take (135) 0 0 0 0 729Managers (15)$ 0 0 0 0 81IRR 40%


Case Study: Cap des Biches

Bank debt and equity-linked structured financing in the context of leveraged buyout financing, including valuation and exit strategies. Mezzanine and VC financing.

What financial structure enables the acquiring group to retain control?

What is the cost of financing? “How much equity should/must our client give

up in order to get the funding we need?”


Case Study: Cap des Biches (B)

The LBO Proposal Devise a recommended financing plan

GTI (owner)

Buyers Other Investors


Bank loans Loan from seller Private equity investors Family money

Financing Sources

Financing a Growing Company



Financing a Growing Company

How fast can we grow? How should we finance our growth?

What kind of equity financing? What’s our exit plan? A public offering?

Do we want money, management, or more?

What’s our company worth?

How can we make it worth more?


Corporate Financing Life-Cycle

Growth companies Mature companies

Leverage


First, Why Equity?

Benefits of EquityFlexibility: cannot afford to have fixed

obligationsStrategic partnersInterventionist partners

DisadvantagesNo tax shieldExpensive!


What Kind of Equity?

Sources of EquityPrivate investorsStrategic investorsInterventionist investorsPublic market

And KindsCommon stockStock with restricted voting rightsHybrids, including convertibles


messageclick

Started in September 1997, messageclick enables users to send faxes and receive faxes over the internet at a low cost.

By June 1998 the company had expanded its services and was signing up subscribers at the rate of 100,000 a day.

Initial funding was “Angel” finance, but now the expansion was exceeding the company’s financial, physical and managerial capacity. On two occasions it had literally run out of money.

What form of equity financing would be appropriate for messageclick?


Pre-IPO Equity Financing

Friends and family Angel Venture capital Strategic partners


Private Equity Funds

Private equity funds are generally structured as partnerships specializing in venture capital, leveraged buyouts, and corporate restructuring.

The private equity fund mobilizes funds, selects and monitors investments, eventually exiting the investment and paying back the investors.


Silipos Inc


Silipos Inc, 1999

Where do you want

to go?

Debt?Debt?

Acquisition?Acquisition?

IPO?IPO?

Sell?Sell?


IntraLinks


IntraLinks’ Choices

Issue debt, either by borrowing from one of the big New York banks keen to get more involved in promising Internet businesses, or by means of a private placement of debt notes, possibly with “sweeteners” such as warrants to attract a lender.

Seek out one or more private equity investors, ones who believed in the company’s product and its management.

Do an initial public offering (IPO). Find another corporation who would be willing to

acquire IntraLinks.

Initial Public Offerings:Underwriting, Distribution

and Pricing



EquityBanking Fixed Income

Investment Banking: Organizarion

“Coverage”

•Corporate Finance•Mergers & Acquisitions•Investment Banking

Debt Capital Markets (DCM)

•Syndicate•Marketing

Sales•Institutional•Retail

Trading (proprietary)•Risk •Profits

Structured FinanceCredit ResearchPrivate PlacementLoan Syndication

Equity Capital Markets (ECM)

•Sales•Trading•Research


Investment Banking: Organization

New Deal Pitch Team Coverage/

Investment banking Product (DCM or

ECM)

Commitment Committee Investment banking ECM/DCM Senior sales/trading Research


Underwriting Sequence

Engagement: Mandate signed by issuer engaging lead manager

Due Diligence: Conducted by Lead manager

Documentation: Loan agreement, Prospectus

Signing: Underwriting agreement signed and issue priced

Closing: Settlement of the offering

EngagementEngagement

Due Diligence and

Documentation

Due Diligence and

Documentation

Signing and PricingSigning and Pricing

ClosingClosing

“Beauty Contest”“Beauty Contest”


The Beauty Contest

Criteria for Selecting a Lead Manager 1 Experience with similar transactions (sector,

market, currency, maturity, high or low-quality issuers)

Ranking in League Tables Placement power with institutional and/or

retail investors Standing in secondary market as “market

maker” and commitment to secondary market trading


The Beauty Contest (Cont.)

Criteria for Selecting a Lead Manager 2 Quality/reputation of research Proposed marketing strategy (pricing,

timing, issue size, etc.) Proposals for “Roadshow” Relationships with potential co-

managers Senior management commitment to

backing issue with people and capital


The Roadshow

Organized by global coordinator and lead managers

Informal presentation by management to potential investors

Attendance limited to professional intermediaries and investing institutions

Content must be consistent with information in draft version of prospectus or offering circular.


Distribution

Lead ManagerBook-Runner

“International Coordinator

Joint Co-Lead

ManagerJoint Co-Lead

ManagerJoint Co-Lead

Managers

Lead

ManagerLead

ManagerLead

Managers

ManagerManagerManagers Selling Agent

Co-Lead Manager

Question:Which banks are involved with an IPO, and what are their roles?


Issuing Equity: Key Players

MANAGERSUNDER-

WRITERS

SELLING

GROUP


Securities Underwriting: Relationships

Issuer

Agents Investment Bankers

Debt: Fiscal agent

Equity:

Depositary institution

Lead manager/Bookrunner

Registered offering: Underwriting Agreement

Unregistered: Purchase Agreement

Co-managers

Agreement Among Underwriters

Prospectus/Offering Circular

Institutional Buyers Retail Buyers


Subscription or Underwriting Agreement Between issuer, global coordinator and all managers Signed after pricing when “book-building” completed Firm commitment to underwrite, subject to delivery of

certain confirmatory certificates and no “material adverse change” or “force majeure”

Indemnity: By the issuer in favor of Global Coordinator and Managers against liability arising as a breach of warranty, material inaccuracy or omission

Lock up: Issuer will not offer other securities for a period of time (eg six months)


Underwriting Economics

Selling Concession

60%

Underwriting Fee20%

Management Fee20%

Management Fee: Normally shared equally among managers (may be subject to a praecipium for Global Coordinator or Lead Manager)

Selling Concession: Payable as a percentage of allocation (determined by book-runner)

Underwriting Fee: Based on underwriting commitment (often less expenses of offering)


Pricing

Debt Instruments Bonds priced according

to yield over benchmark (spread)

Yield too low – issue does not sell

Yield too high – too much given away

Generally syndicate holds price for a day; in a successful issue yields gradually tighten

Equity Mature issue: based on

current market price and market conditions, small premium for dilution; comparables

IPO: comparables and discounted cash flow analysis


Pricing and Fees

The Business Telecoms Dot-Coms Avons(How much volatility?)

Debt

Equity

Fees

0.15%

to

1.5%

5% to

7%

PricingT+Spread

L+Spread

Comparables/Ratios

The market

Future cash flow valuation

The Issuer

Valuing a Business



Valuing a Firm with DCF

Historical financial results

Adjust for nonrecurring aspects

Gauge future growth

Adjust for noncash items

Projected sales and operating profits

Projected free cash flows to the firm (FCFF)

Year 1 FCFF

Year 2 FCFF

Year 3 FCFF

Year 4 FCFF

Terminal year FCFF

Stable growth model or P/E comparable

Present value of free cash flows

+ cash, securities & excess assets

- Market value of debt

Value of shareholders equity

…

Discount to present using weighted average cost of capital (WACC)


What’s a Company Worth?

Required returns Types of Models

Balance sheet modelsComparablesCorporate cash flow models

Estimating Growth Rates Applications Option-based models


IBM’s Financials


Equity Valuation: From the Balance Sheet

Value of AssetsBookLiquidationReplacement

Value of Liabilities

BookMarket

Value of Equity


Equity Valuation: From the Balance Sheet

Value of AssetsBookLiquidationReplacementOr what?

A New York City study estimated that the 322 trees surveyed had an average value of $3,225 per tree and a total value of $1,038,458. The value was said to be the amount the city would have to pay to replace the tree. (New York Times, 12 May 2003)


Relative Valuation

In relative valuation, the value of an asset is derived from the pricing of 'comparable' assets, standardized using a common variable such as earnings, cashflows, book value or revenues. Examples include:

• Price/Earnings (P/E) ratios and variants (EBIT multiples, EBITDA multiples,

Cash Flow multiples)

• Price/Book (P/BV) ratios and variants (Tobin's Q)

• Price/Sales ratios


Comparables

Value Indicator Earnings Cash Flow Revenues Book

Value Indicator Earnings Cash Flow Revenues Book

Average Comparable Industry Firms Deals

Average Comparable Industry Firms Deals

Target

Company

Numbers or

Projections

Target

Company

Numbers or

Projections

Estimated

Value of

Target

Estimated

Value of

Target


IBM: Comparables

Corporate Cash Flow



Discounted Cashflow Valuation: Basis for Approach

where n = Life of the asset CFt = Cashflow in period t r = Discount rate reflecting the

riskiness of the estimated cashflows

Value = CFt

(1+ r)tt =1

t = n


Equity Valuation in Practice

Estimating discount rate Estimating cash flows Estimating growth Application with constant growth: Optika Application with shifting growth: IBM


Start with theWeighted Average Cost of Capital

Choice Cost1. Equity Cost of equity

- Retained earnings - depends upon riskiness of the stock

- New stock issues - will be affected by level of interest rates

- Warrants

Cost of equity = riskless rate + beta * risk premium

2. Debt Cost of debt

- Bank borrowing - depends upon default risk of the firm

- Bond issues - will be affected by level of interest rates

- provides a tax advantage because interest is tax-deductible

Cost of debt = Borrowing rate (1 - tax rate)

Debt + equity = Cost of capital = Weighted average of cost of equity and

Capital cost of debt; weights based upon market value.

Cost of capital = kd [D/(D+E)] + ke [E/(D+E)]


IBM’s Cost of Capital

IBM

Cost of Capital Cost Amount Weight

Debt10-year bond yield 4.95%Tax rate 29%After-tax cost 3.5% 61.9 31%

EquityRisk-free Treasury 4.50%Beta 1.47Market Risk Premium 5.50%From CAPM 12.6% 137.4 69%

Total 9.77% 199.3

Source: IBMfinancing.xls


Valuation: The Key Inputs

A publicly traded firm potentially has an infinite life. The value is therefore the present value of cash flows forever.

Since we cannot estimate cash flows forever, we estimate cash flows for a “growth period” and then estimate a terminal value, to capture the value at the end of the period:

Value = CF

t

(1+ r)tt = 1

t =

Value = CFt

(1 + r)t

Terminal Value

(1 + r)N

t = 1

t = N


Finding Free Cash Flows

Revenue- Expenses- Depreciation

= EBITAdjust for tax: EBIT(1-T)

+ Depreciation- Capex- Ch working capital

= Free Cash Flows to Firm

Revenue 81.20

-Expenses (67.99)

-Depreciation (4.95)

EBIT 8.26

EBIT(1-t) 5.90

+Depreciation 4.95

-CapEx (4.31)

-Change in WC (0.90)

FCFF 5.64


Deriving IBM’s Free Cash Flows

Data 4Q02ttmSales, ttm 81.20$ billionOperating costs 67.99$ billion 84%Depreciation 4.95$ billionEBIT 8.26$ billionTax 2.36$ billion 29%Cap Ex 4.31$ billionChange in WC 0.90$ billionInterest expense 0.15$ billion

Free Cash Flows $bRevenue 81.20

-Expenses (67.99)

-Depreciation (4.95)

EBIT 8.26

EBIT(1-t) 5.90

+Depreciation 4.95

-CapEx (4.31)

-Change in WC (0.90)

FCFF 5.64

Interest 0.15$

FCFE 5.49$ IBMvaluation.xls


Choosing a Growth Pattern: Examples

Company Valuation in Growth Period Stable Growth

PWC Nominal U.S. $ 10 years 6%(long term Firm (3-stage) nominal growth

rate in the world economy

DirecTV Nominal US$ 5 years 4%: based upon Equity: FCFE (2-stage) expected long term

US growth rate

Allianz Nominal Euro 0 years 3%: set equal to Equity: Dividends nominal growth

rate in the Europeaneconomy


Valuing a Firm with DCF: The Short Version




Free cash flows to the firm (FCFF)

Calculate weighted average cost of capital (WACC)

Estimate stable growth rate (g)




Discount to present using constant growth model

FCFF(1+g)/(WACC-g)


Constant Growth Model

gr

gCFVo

o

)1(

gr

gCFVo

o

)1(

g = constant perpetual growth rate


Constant Growth Model: Example

gr

gCFVo

o

)1(

gr

gCFVo

o

)1(

CF0 = $3.00 r = 12% g = 4%

V0 = 3.12/(.12 - .04) = $39.00

Motel 6 has cash flows available to shareholders of $3 per share. The required return that shareholders expect is 12%

The earnings are expected to grow at 4% per annum

What’s an M6 share worth?

Motel 6 has cash flows available to shareholders of $3 per share. The required return that shareholders expect is 12%

The earnings are expected to grow at 4% per annum

What’s an M6 share worth?


Optika: Facts

The firm has revenues of €3.125b, growing at 5% per annum. Costs are estimated at 89%, and working capital at 10%, of sales. The depreciation expense next year is calculated to be €74m.

Optika’s marginal tax rate is 35%, and the interest on its €250m of debt is 8.5%.

The market value of equity is €1.3b. Is this firm fairly valued in the market? What

assumptions might be changed?


Growth 5%Tax rate 35%Initial Revenues 3125COGS 89%WC 10%Equity Market Value 1300Debt Market Value 250Beta 1Treasury bond rate 7%Debt Spread 1.50%Market risk premium 5.50%

T+1Revenues next year 3281-COGS 2920-Depreciation 74=EBIT 287EBIT(1-Tax) 187+Depreciation 74-Capital Expenditures -74-Change in WC -16-Free Cash Flow to Firm 171Cost of Equity (from CAPM) 12.50%Cost of Debt (after tax) 5.53%WACC 11.38%

Firm Value 2681

Equity Value 2431

Optika

optika.xls


Growth 5%Tax rate 35%Initial Revenues 3125COGS 89%WC 10%Equity Market Value 1300Debt Market Value 250Beta 1Treasury bond rate 7%Debt Spread 1.50%Market risk premium 5.50%

T+1Revenues next year 3281-COGS 2920-Depreciation 74=EBIT 287EBIT(1-Tax) 187+Depreciation 74-Capital Expenditures -74-Change in WC -16-Free Cash Flow to Firm 171Cost of Equity (from CAPM) 12.50%Cost of Debt (after tax) 5.53%WACC 11.38%

Firm Value 2681

Equity Value 2431

Optika

CAPM:

7%+1(5.50%)

Debt cost

(7%+1.5%)(1-.35)

WACC:

ReE/(D+E)+RdD/(D+E)

Value:

FCFF/(WACC-growth rate)

Equity Value:

Firm Value - Debt Value

= 2681-250 = 2431

optika.xls


Valuing a Firm with DCF: The Extended Version


Adjust for nonrecurring aspects

Gauge future growth



Projected free cash flows to the firm (FCFF)

Year 1 FCFF

Year 2 FCFF

Year 3 FCFF

Year 4 FCFF

Terminal year FCFF

Stable growth model or P/E comparable


+ cash, securities & excess assets



…

Discount to present using weighted average cost of capital (WACC)


Shifting Growth Rate Model

T

TT

tt

t

oorgr

gCF

r

gCFV

)1)((

)1(

)1(

)1(

2

2

1

1

T

TT

tt

t

oorgr

gCF

r

gCFV

)1)((

)1(

)1(

)1(

2

2

1

1

g1 = first growth rate

g2 = second growth rate

T = number of periods of growth at g1


Mindspring pays cash flows of $2 per share. The required return that shareholders expect is 15%

The dividends are expected to grow at 20% for 3 years and 5% thereafter

What’s a Mindspring share worth?

Mindspring pays cash flows of $2 per share. The required return that shareholders expect is 15%

The dividends are expected to grow at 20% for 3 years and 5% thereafter

What’s a Mindspring share worth?

Shifting Growth Rate Model: Example

CF0 = $2.00

g1 = 20% g2 = 5%

r = 15% T = 3

V0 = CF1/(1.15)+CF2/(1.15)2+CF3/(1.15)3

+ CF4/(15%-5%)(1.15)3

= 2.40/(1.15)+2.88/(1.15)2+3.46/(1.15)3

+ 3.63/(.15-.05)(1.15)3

= $30.40


Case Study: IBM


Case Study: IBM

Constant growth model valuation:FCFF 5.64WACC 9.77%Growth rate 5.70%

Firm Value 146.51 billionless debt -61.86 billionEquity value 84.65 billion divided by 1.69 gives 50.09$ per share

2-stage growth model valuationStage 1 10%Stage 2 5.70%

End of year 2002 2003 2004 2005 2006 2007 2008Revenue 81.20 89.32 98.25 108.08 118.88 130.77 138.23-Expenses -67.99 -74.79 -82.27 -90.49 -99.54 -109.50 -115.74-Depreciation -4.95 -5.45 -5.99 -6.59 -7.25 -7.97 -6.94EBIT 8.26 9.09 9.99 10.99 12.09 13.30 15.55EBIT(1-t) 5.90 6.49 7.14 7.85 8.64 9.50 11.10+Depreciation 4.95 5.45 5.99 6.59 7.25 7.97 6.94-CapEx -4.31 -4.74 -5.22 -5.74 -6.31 -6.94 -6.94-Change in WC -0.90 -0.99 -1.09 -1.20 -1.32 -1.45 -1.53FCFF 5.64 6.20 6.82 7.51 8.26 9.08 9.57

235.25Total 6.20 6.82 7.51 8.26 244.34PV 5.65 5.66 5.68 5.69 153.32Total PV 176.00less debt -61.86 billionEquity value 114.13 billion divided by 1.69 gives 67.53$ per share

IBMvaluation.xls


Application to a Private Firm: “Argus”

The company is in the advertising and public relations business. It is privately owned, but the other major competitors are publicly traded.

It has grown rapidly but growth is leveling off to about 3-6%. Interest on Argus’ €16 million debt is €2.4 million and EBITDA is €12 million.

How would you estimate the company’s Future growth rates? Beta? Cost of Equity? Cost of debt? Firm value?


Source: www.damodaran.com

(Updated data)

http://www.damodaran.com/


Analyzing a Private Firm

The approach remains the same with important caveats It is more difficult estimating firm value, since the

equity and the debt of private firms do not trade; we use comparables

Most private firms are not rated; we have to estimate a rating to get the cost of debt

If the cost of equity is based upon the market beta of comparable companies, it is possible that we might be underestimating the cost of equity, since private firm owners often consider all risk.

M&A Valuation



Equity Valuation in an Acquisition

Estimating synergies Estimating business restructuring Estimating financial restructuring Application to Basix Valuation in a bidding context


The Gains From an Acquisition

Gains from merger

Synergies Control

Top line Financial

restructuring

Business

Restructuring

(M&A)

Bottom line


The Basics

IBM is considering the acquisition of Basix, Inc. The shares are trading at a P/E of 11, far below IBM’s P/E of 18. Based on past performance the company is expected to earn $2 per share next year, an increase from the current EPS of $1.93. If IBM acquires Basix, the long-run EPS growth rate could be raised to 5.5%. The Treasury bond yield is 4.5%, the company’s beta is 1.3 and the long run market return is 11.5%. Is the company worth buying at a P/E of 12? At how much of a premium should we say fugedaboudit?


Basix

Use constant growth model

Before AfterEarnings 1.93$ 1.93$ Next year 2.00$ 2.00$ Growth rate 3.6% 5.5%Risk free rate 4.50% 4.50%Beta 1.3 1.30 Market return 11.50% 11.50%Req ret on equity 13.60% 13.60%Value 20.05$ 24.69$ P/E 10.4 12.8Price 21.23$ 16%

Source: basix.xls


M&A and Leverage: Flexics

Leveraged buyout?

Company has

unused debt

capacity Leveraged

recapitalization?

Takeover?


Contact

Prof. Ian Giddy

NYU Stern School of Business

44 West 4th Street

New York, NY 10012

Tel 212-998-0563; Fax 212-995-4233

[email protected]

www.giddy.org

investment banking and the private firm prof. ian giddy stern school of business new york university

Documents

giddy introduction

mezzanine slide

lbo refinancing slide

cost of debt

common stock slide

subordinated debt

senior debt

lbo financing stage