合并中的财务(英文版)课件

BusinessFinance

FAE2002/2003JohnSlevinIFTBusinessFinance

FAE2002/2003BusinessFinanceObjectives:ToDevelopanunderstandingof Principlesoffinancing Decisionsand appropriateCapitalstructures Financialimplicationsofachangeinsize orcircumstances Principlesofriskmanagement EffectivemanagementofForeign currencyandrelatedtreasurytransactions SourceofCapitalandCapital ManagementBusinessFinanceObjectives:ToWhatisBusinessFinance?FinancialPlanning&ControltoAchievetheFinancialObjectivesoftheFirmWhatisBusinessFinance?BusinessFinanceBusinessFinanceBusinessFinanceFinancialManagementisthereforeallaboutResidualCashFlowsWhichaccruetoOrdinaryShareholdersHencetheimportanceoftheTimeValueofMoneyOrPresentValueBusinessFinanceFinancialManaBusinessFinancePresentValue Futurecashflowsdiscountedbacktotoday's Value 1/(1+R)^n R=TheappropriateDiscountRate (WeightedAverageCostofCapital)BusinessFinancePresentValueMostImportantDecisionTheInvestmentDecisionoftenviewedasthemostimportantdecision.Decisionmadenowaffectsfuturereturns.Generallycan’treversedecisionwithoutsignificantlossofinitialinvestment.MostImportantDecisionTheInvFinancialImplicationsofachangeinFirmSizeInternal

Chapter8CapitalBudgetingExternal

Chapter11ValuationofCompanies

Chapter12Mergers&Take-oversFinancialImplicationsofachInternalGrowthWhatConstitutesInternalGrowth?ProductMarketVolumeServiceInternalGrowthWhatConstituteInternalGrowthLargeCapitalExpenditureDecisionInvestmenti.e.MajorOutlayAtStartofProjectInvestmentinWCProjectedStreamofInflowsTerminalValuesInternalGrowthLargeCapitalEInternalGrowthThekeyQuestion:IsthisProjectWorththeInvestmentBusinessFinanceseekstoanswerthisthroughComparativeCostsAccountingRateofReturn(ARR)PaybackDiscountedCashFlowsInternalGrowthThekeyQuestioInternalGrowthAccountingRateofReturn Page207

AverageAnnualProfits *100%

AverageInvestmentPluses: Easytocalculate&UnderstandMinus: AccountingProfitnotCashFlowExamplePage207InternalGrowthAccountingRateInternalGrowthPayback Page209HowLongtorepaymentofInitialInvestmentPluses:Easy/LiquidityMgt/Caution/RiskMgtMinuses:NoCashpostPB/NoTVOM/TimingPage211InternalGrowthPayback PageInternalGrowthComparativeCost Page211ProjectwithlowestcostwinsIgnoresTimeValueofMoneyProjectCashFlowsInternalGrowthComparativeCosInternalGrowthDiscountedCashFlows(DCF) Page212InternalRateofReturnDiscountsallCFatRateforZeroNPVPluses:Cashflow/TVOMMinuses:Notunique/MagnitudeofCF/FailstoselectbetweenMutuallyExclusiveInternalGrowthDiscountedCashInternalGrowthDiscountedCashFlows(DCF) Page217NetPresentValueDiscountsallCFatCostofCapitalPluses:Cashflow;TVOM;MagnitudeofCFMinuses:None!

Page218InternalGrowthDiscountedCashInternalGrowthExamTipBeabletoperformthesecalculationsOrganiseyouranswerStateAssumptionsClearlyBePracticalInternalGrowthExamTipInternalGrowthCapitalRationingFundsnotsufficienttoacceptall+NPVProjectsNoLeverageavailableIssuecosttoohighBorrowingLimitsRankViaProfitabilityIndexInternalGrowthCapitalRationiInternalGrowthProfitabilityIndex=NPV.OutlayinYearofRationing

NPV=ProjectNPVOutlay=ProjectOutlay InternalGrowthProfitabilityIInternalGrowthOtherIssues/FactorstobeConsideredCapitalAllowancesBusinessRisk(OperatingGearing)TimingofCashFlowsRelevantCashFlows(IgnoreSunkCosts)RiskAdjustedCostOfCapitalSensitivityAnalysisInflation(?)InternalGrowthOtherIssues/InternalGrowthRiskandUncertaintyRiskAdjustedCostofCapital=>CAPMObjectivityanissueTimelimitonCashFlowsWeightsshortprojectsSensitivityAnalysisInternalGrowthRiskandUncertInternalGrowthSensitivityAnalysisAbsolutesumARateCertaintyEquivalentApproachProbabilityTheorySimulationModelsInternalGrowthSensitivityAnaInternalGrowthLeaseVBuy TraditionalMethod(Page238)AcquisitionDecisionIsAssetworthhavingNPVassumingoutrightpurchaseIfNPV=+GotoFinancingDecisionFinancingDecisionLeaseorBuyUsecostofBorrowingsasDiscountRateInternalGrowthLeaseVBuy TraInternalGrowthLeaseVBuy AlternativeMethod(Page241)FinancingDecisionLeasingVOutrightpurchaseusingaftertaxcostofborrowingsasCOCInvestmentDecisionOperatingCFusingWACCandincorporatePVofBestFinancingDecisionInternalGrowthLeaseVBuy AltInternalGrowthAssetReplacementDecisionsIdenticalNewReplacementcycletominPVoperatingCostsUseEquivalentAnnualCost(NoInflation)i.e.PVCost*AnnuityFactorforlifeofasset(Seepage242)OtherwiseLowestCommonMultipleorFinitemethodeg15yearsInternalGrowthAssetReplacemeInternalGrowthAssetReplacementDecisionsDifferentAssetWhentoreplacenothowoftentogivethelowesttotalPVCostEquivalentAnnualCostofNewMachineinperpetuityplusPVofOldMachineSeepage243InternalGrowthAssetReplacemeValuationofCompaniesReasonsforValuationQuotedandUnquotedcompaniesValuationMethodsSharePrices&MarketEfficencyValuationofCompaniesTheValuationofQuoted&UnquotedCompanies

ValuationofSharesisnecessarywhen

QuotedCompanyTake-overBidStockMarketpriceisnotperceivedasfairvaluePartSaleManagementBuyoutUnquotedCompany(PrivateCompany)TaxationMergerFlotationSecurityforLoanShareOptionTheValuationofQuoted&UnquUnquotedCompaniesDiscounttheP/ELossofKeyEmployeesPremiumforcontrollinginterestGearingUnquotedCompaniesDiscounttheTheValuationofQuoted&UnquotedCompaniesMethodsofValuationP/EEarningsMethodAccountingRateofReturnNetassetsmethodDividendyieldmethodCAPM(plusDivyieldmethod)SuperProfitsMethodDiscountedFutureProfitsChoiceofmethoddependsonsizeofshareholdingbeingvaluedi.e.reasonforvaluationTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesMethodofValuationisdependentondecisioncriteriaTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesP/ERatioEarningsMethodofValuationP/ErelatesearningspersharetoShareValueP/E=MarketValuepershare EarningsperShareMarketValuepershare=P/E*EPSMarketValue=Earnings*P/ETheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesP/ERatioEarningsMethodofValuationEPScanbehistoricalofprospective(Exam)HighertheP/EthehigherthePriceHighP/Emayindicate:ExpectationofEPSfuturegrowthSecurityofEarningsStatusQuotedCompany(P/EofUnquotedCo50%ofQuotedcompany)TheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesP/ERatioEarningsMethodofValuationGuidelines:UnquotedCoP/Eisultimatelynegotiation:LookatGeneraleconomiesandfinancialconditionsTypeofindustryanditsprospectsSizeofCowithintheindustry&overallmarketMarketabilityDiversityofShareholdingsSustainabilityandreliabilityofProfitsAssetBackingandLiquidityNatureofAssetsGearingKeyIndividual&/orSkillrelianceTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesTheAccountingRateofReturnMethodValue=EstimatedFutureProfits Req.RoRonCapEmpAdjustProfitsforchangespostacquisitionin:DirectorsRemunerationInterestCharges(DebtRestructuring)ChargefornotionalRentwhereexistingpropertieswillbesoldProduct&/ormanagementrationalisationTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesTheAccountingRateofReturnMethodUsedtodeterminethemaximumPriceasitrepresentsdesiredreturnpostacquisitionTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesNetAssetsMethodValueofSharesinaparticularclass=TheNetTangibleassetsattributabletothatclassbythenumberofsharesinthatclassExcludeintangiblesunlesstheyhaveamarketvalueAssetvaluesvaryandthisisthebiggestdifficultywiththismethodTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesNetAssetsMethodProfessionalValuationAreallliabilitiesreflectedintheNetAssetsAreCurrentassetsvaluedproperlyGoingconcernVBreakupvalueCostofRationalisationpostacquisitionOffBalanceSheetissuesTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesNetAssetsMethodusewhen:Securityfactori.e.minvalueofcompanyMeasureofcomparisoninamergerCoAlowassetbackingCoBhighassetbackingCoBwouldexpectapremiumforstrongassetbasePage369TheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesDividendYieldMethodValue= DividendinPence

ExpectedDividendYield%MinorityinterestvaluationOnecanusethegrowthmodeltoreflectfuturedividendMV=Do(1+G) (R-G)Do=CurrentDivG=GrowthR=CostofCapitalTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesCAPMMethodGoodforpricingsharesforStockexchangelistingUseitinconjunctionwithDivYieldmethodKe=Rf+B(Rm-Rf)Ke=costofequity=costofcapitalforDivYieldRf=RiskFreeRate(TreasuryBills)B=Company’sBetaRm=MarketReturnTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesCombinationofEarnings&NetAssetBasisAcquisitionongoingconcernbasisbutsomeassetswillbesoldUseEarningsmethodadjustforNRVofassetssoldTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesSuperProfits(OutofFashion)ExcessofexpectedprofitsoverfairreturnusedtocalculategoodwillGoodwillisthenaddedtoNetassetsDiscountedFutureProfitsDiscountthefuturecashflowspostacquisitioninvestmentatappropriatecostofCapitalTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesSharePrice&MarketEfficiencyCharting&TechnicalAnalysistopredictsharepriceEfficientMarketHypothesisThedegreetowhichinformationisreflectedinthesharepriceWeakFormSemiStrongFormStrongFormTheValuationofQuoted&UnquMergers&Take-oversProcessDuediligenceMgtBuy-outsListingRulesMergers&Take-oversMergersandTake-oversTake-OverPurchaseofacontrollinginterestMergerAnamalgamationoftwocompaniestoformasinglecompanyThisdistinctionisnotalwaysclearMergersandTake-oversTake-OveMergersandTake-oversReasonforM&AissynergisticOperatingEconomiesManagementAcquisitionDiversificationAssetBackingQualityofearnings(portfolioimpact)FinanceandliquidityGrowthMarketShare/removalofCompetitionIncreasesEPSEntryintonewmarketTaxDefensiveMergersandTake-oversReasonfMergersandTake-oversTypesofM&AHorizontalVerticalConglomerateMergersandTake-oversTypesofMergersandTake-oversPurchaseConsiderationCash=BuyouttheothershareholdersPaper= Issuingnewshares(Paper)as considerationMergersandTake-oversPurchaseMergersandTake-oversFactorsaffectingtheChoiceAcquiringCompanyDilutionofEPSCosttotheCompanyGearingControlIncreaseinAuthorisedsharecapitalIncreaseinBorrowingLimitsMergersandTake-oversFactorsMergersandTake-oversFactorsaffectingtheChoiceAcquiredCompanyTaxationCashimmediateCGT/SharespostponedCGTIncomeMaintenanceVimmediatecapitalGainFutureinvestmentsBeAwareofMezzanineFinanceMergersandTake-oversFactorsMergersandTake-oversDefenceagainstaTake-OverDefencetacticsaregovernedbycitycodeonM&ADirectorsmustatalltimesactinbestinterestofshareholdersPrepareadefendingcircularMkpriceofacquirertohighnotsustainableMkpriceofacquirertolownotfairvalueProfitForecastsRevalueassetsHigherDividendsMergersandTake-oversDefenceMergersandTake-oversDefenceagainstaTake-OverManagementChangesWhiteKnight(Sameinfotoallparties)Sellcrownjewels(Codedoesn’tallowthis)Reversetake-over(Packmanstrategy)GoldenParachute(Codedisclosure)DiscreditofferRefertomonopolies&mergerscommissionMergersandTake-oversDefenceMergersandTake-oversDefenceagainstaTake-OverCitycodedoesnotallowSellingoracquiringmaterialamountofassetsNonnormalcontractsIssuingmoresharesorsecuritiesMergersandTake-oversDefenceMergersandTake-oversAdvisingthebiddingandtargetcompanyRecommendingaPriceVariousvaluationtechniquesEvaluatinganexistingofferMaxandminvaluesEvaluatetheofferVariousvaluationtechniquesMergersandTake-oversAdvisingAnAcquisitionIdentificationofacquisitioncriteriaHeadsofAgreementDueDiligenceSale&PurchaseagreementAnAcquisitionIdentificationoPostAcquisitionStrategicCulturalOperationalPostAcquisitionDuediligenceAccountingLegalcommercialTechnicalPage417DuediligenceAccountingMergersandTake-oversManagementBuyoutsPartiesManagementTeamacquisitionDirectorsDisinvestmentFinancialbackersofbuyoutteamMergersandTake-oversManagemeMergersandTake-oversManagementBuyoutsReasonsSubperipheraltomainactivesLossmakingSubParentConeedscashNewownerofgrouprationalisingBettercorporationandpriceagreementRetiringmanagement(privateco)MergersandTake-oversManageme

MergersandTake-overs

MotivationsforMBO

MorelikelytosucceedRisksEquityInvestmentPersonalwealthexposurePersonalborrowingriskRewardsLargeLongtermpayoffFlotationifsuccessfulOwnermanagedOnlyoptiontoredundancy

MergersandTake-overs

MotivMergersandTake-oversManagementBuyoutsInstitutionalinvestorDoesMgtTeamhavefullrangeofskillsWhyisCoforsaleBusinessPlanWhatisbeingboughtWhatisthepriceandisitreasonableMgtowninvestmentLongTermstakewithexitmechanismMergersandTake-oversManagemeMergersandTake-oversManagementBuyoutsProblemsFairpriceTaxation&LegalChangingworkingpracticesCashFlowsExistingpensionrightsBoardformationLossofkeyemployeesMergersandTake-oversManagemeBusinessFinance

FAE2002/2003JohnSlevinIFTBusinessFinance

FAE2002/2003BusinessFinanceObjectives:ToDevelopanunderstandingof Principlesoffinancing Decisionsand appropriateCapitalstructures Financialimplicationsofachangeinsize orcircumstances Principlesofriskmanagement EffectivemanagementofForeign currencyandrelatedtreasurytransactions SourceofCapitalandCapital ManagementBusinessFinanceObjectives:ToWhatisBusinessFinance?FinancialPlanning&ControltoAchievetheFinancialObjectivesoftheFirmWhatisBusinessFinance?BusinessFinanceBusinessFinanceBusinessFinanceFinancialManagementisthereforeallaboutResidualCashFlowsWhichaccruetoOrdinaryShareholdersHencetheimportanceoftheTimeValueofMoneyOrPresentValueBusinessFinanceFinancialManaBusinessFinancePresentValue Futurecashflowsdiscountedbacktotoday's Value 1/(1+R)^n R=TheappropriateDiscountRate (WeightedAverageCostofCapital)BusinessFinancePresentValueMostImportantDecisionTheInvestmentDecisionoftenviewedasthemostimportantdecision.Decisionmadenowaffectsfuturereturns.Generallycan’treversedecisionwithoutsignificantlossofinitialinvestment.MostImportantDecisionTheInvFinancialImplicationsofachangeinFirmSizeInternal

Chapter8CapitalBudgetingExternal

Chapter11ValuationofCompanies

Chapter12Mergers&Take-oversFinancialImplicationsofachInternalGrowthWhatConstitutesInternalGrowth?ProductMarketVolumeServiceInternalGrowthWhatConstituteInternalGrowthLargeCapitalExpenditureDecisionInvestmenti.e.MajorOutlayAtStartofProjectInvestmentinWCProjectedStreamofInflowsTerminalValuesInternalGrowthLargeCapitalEInternalGrowthThekeyQuestion:IsthisProjectWorththeInvestmentBusinessFinanceseekstoanswerthisthroughComparativeCostsAccountingRateofReturn(ARR)PaybackDiscountedCashFlowsInternalGrowthThekeyQuestioInternalGrowthAccountingRateofReturn Page207

AverageAnnualProfits *100%

AverageInvestmentPluses: Easytocalculate&UnderstandMinus: AccountingProfitnotCashFlowExamplePage207InternalGrowthAccountingRateInternalGrowthPayback Page209HowLongtorepaymentofInitialInvestmentPluses:Easy/LiquidityMgt/Caution/RiskMgtMinuses:NoCashpostPB/NoTVOM/TimingPage211InternalGrowthPayback PageInternalGrowthComparativeCost Page211ProjectwithlowestcostwinsIgnoresTimeValueofMoneyProjectCashFlowsInternalGrowthComparativeCosInternalGrowthDiscountedCashFlows(DCF) Page212InternalRateofReturnDiscountsallCFatRateforZeroNPVPluses:Cashflow/TVOMMinuses:Notunique/MagnitudeofCF/FailstoselectbetweenMutuallyExclusiveInternalGrowthDiscountedCashInternalGrowthDiscountedCashFlows(DCF) Page217NetPresentValueDiscountsallCFatCostofCapitalPluses:Cashflow;TVOM;MagnitudeofCFMinuses:None!

Page218InternalGrowthDiscountedCashInternalGrowthExamTipBeabletoperformthesecalculationsOrganiseyouranswerStateAssumptionsClearlyBePracticalInternalGrowthExamTipInternalGrowthCapitalRationingFundsnotsufficienttoacceptall+NPVProjectsNoLeverageavailableIssuecosttoohighBorrowingLimitsRankViaProfitabilityIndexInternalGrowthCapitalRationiInternalGrowthProfitabilityIndex=NPV.OutlayinYearofRationing

NPV=ProjectNPVOutlay=ProjectOutlay InternalGrowthProfitabilityIInternalGrowthOtherIssues/FactorstobeConsideredCapitalAllowancesBusinessRisk(OperatingGearing)TimingofCashFlowsRelevantCashFlows(IgnoreSunkCosts)RiskAdjustedCostOfCapitalSensitivityAnalysisInflation(?)InternalGrowthOtherIssues/InternalGrowthRiskandUncertaintyRiskAdjustedCostofCapital=>CAPMObjectivityanissueTimelimitonCashFlowsWeightsshortprojectsSensitivityAnalysisInternalGrowthRiskandUncertInternalGrowthSensitivityAnalysisAbsolutesumARateCertaintyEquivalentApproachProbabilityTheorySimulationModelsInternalGrowthSensitivityAnaInternalGrowthLeaseVBuy TraditionalMethod(Page238)AcquisitionDecisionIsAssetworthhavingNPVassumingoutrightpurchaseIfNPV=+GotoFinancingDecisionFinancingDecisionLeaseorBuyUsecostofBorrowingsasDiscountRateInternalGrowthLeaseVBuy TraInternalGrowthLeaseVBuy AlternativeMethod(Page241)FinancingDecisionLeasingVOutrightpurchaseusingaftertaxcostofborrowingsasCOCInvestmentDecisionOperatingCFusingWACCandincorporatePVofBestFinancingDecisionInternalGrowthLeaseVBuy AltInternalGrowthAssetReplacementDecisionsIdenticalNewReplacementcycletominPVoperatingCostsUseEquivalentAnnualCost(NoInflation)i.e.PVCost*AnnuityFactorforlifeofasset(Seepage242)OtherwiseLowestCommonMultipleorFinitemethodeg15yearsInternalGrowthAssetReplacemeInternalGrowthAssetReplacementDecisionsDifferentAssetWhentoreplacenothowoftentogivethelowesttotalPVCostEquivalentAnnualCostofNewMachineinperpetuityplusPVofOldMachineSeepage243InternalGrowthAssetReplacemeValuationofCompaniesReasonsforValuationQuotedandUnquotedcompaniesValuationMethodsSharePrices&MarketEfficencyValuationofCompaniesTheValuationofQuoted&UnquotedCompanies

ValuationofSharesisnecessarywhen

QuotedCompanyTake-overBidStockMarketpriceisnotperceivedasfairvaluePartSaleManagementBuyoutUnquotedCompany(PrivateCompany)TaxationMergerFlotationSecurityforLoanShareOptionTheValuationofQuoted&UnquUnquotedCompaniesDiscounttheP/ELossofKeyEmployeesPremiumforcontrollinginterestGearingUnquotedCompaniesDiscounttheTheValuationofQuoted&UnquotedCompaniesMethodsofValuationP/EEarningsMethodAccountingRateofReturnNetassetsmethodDividendyieldmethodCAPM(plusDivyieldmethod)SuperProfitsMethodDiscountedFutureProfitsChoiceofmethoddependsonsizeofshareholdingbeingvaluedi.e.reasonforvaluationTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesMethodofValuationisdependentondecisioncriteriaTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesP/ERatioEarningsMethodofValuationP/ErelatesearningspersharetoShareValueP/E=MarketValuepershare EarningsperShareMarketValuepershare=P/E*EPSMarketValue=Earnings*P/ETheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesP/ERatioEarningsMethodofValuationEPScanbehistoricalofprospective(Exam)HighertheP/EthehigherthePriceHighP/Emayindicate:ExpectationofEPSfuturegrowthSecurityofEarningsStatusQuotedCompany(P/EofUnquotedCo50%ofQuotedcompany)TheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesP/ERatioEarningsMethodofValuationGuidelines:UnquotedCoP/Eisultimatelynegotiation:LookatGeneraleconomiesandfinancialconditionsTypeofindustryanditsprospectsSizeofCowithintheindustry&overallmarketMarketabilityDiversityofShareholdingsSustainabilityandreliabilityofProfitsAssetBackingandLiquidityNatureofAssetsGearingKeyIndividual&/orSkillrelianceTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesTheAccountingRateofReturnMethodValue=EstimatedFutureProfits Req.RoRonCapEmpAdjustProfitsforchangespostacquisitionin:DirectorsRemunerationInterestCharges(DebtRestructuring)ChargefornotionalRentwhereexistingpropertieswillbesoldProduct&/ormanagementrationalisationTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesTheAccountingRateofReturnMethodUsedtodeterminethemaximumPriceasitrepresentsdesiredreturnpostacquisitionTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesNetAssetsMethodValueofSharesinaparticularclass=TheNetTangibleassetsattributabletothatclassbythenumberofsharesinthatclassExcludeintangiblesunlesstheyhaveamarketvalueAssetvaluesvaryandthisisthebiggestdifficultywiththismethodTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesNetAssetsMethodProfessionalValuationAreallliabilitiesreflectedintheNetAssetsAreCurrentassetsvaluedproperlyGoingconcernVBreakupvalueCostofRationalisationpostacquisitionOffBalanceSheetissuesTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesNetAssetsMethodusewhen:Securityfactori.e.minvalueofcompanyMeasureofcomparisoninamergerCoAlowassetbackingCoBhighassetbackingCoBwouldexpectapremiumforstrongassetbasePage369TheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesDividendYieldMethodValue= DividendinPence

ExpectedDividendYield%MinorityinterestvaluationOnecanusethegrowthmodeltoreflectfuturedividendMV=Do(1+G) (R-G)Do=CurrentDivG=GrowthR=CostofCapitalTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesCAPMMethodGoodforpricingsharesforStockexchangelistingUseitinconjunctionwithDivYieldmethodKe=Rf+B(Rm-Rf)Ke=costofequity=costofcapitalforDivYieldRf=RiskFreeRate(TreasuryBills)B=Company’sBetaRm=MarketReturnTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesCombinationofEarnings&NetAssetBasisAcquisitionongoingconcernbasisbutsomeassetswillbesoldUseEarningsmethodadjustforNRVofassetssoldTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesSuperProfits(OutofFashion)ExcessofexpectedprofitsoverfairreturnusedtocalculategoodwillGoodwillisthenaddedtoNetassetsDiscountedFutureProfitsDiscountthefuturecashflowspostacquisitioninvestmentatappropriatecostofCapitalTheValuationofQuoted&UnquTheValuationofQuoted&UnquotedCompaniesSharePrice&MarketEfficiencyCharting&TechnicalAnalysistopredictsharepriceEfficientMarketHypothesisThedegreetowhichinformationisreflectedinthesharepriceWeakFormSemiStrongFormStrongFormTheValuationofQuoted&UnquMergers&Take-oversProcessDuediligenceMgtBuy-outsListingRulesMergers&Take-oversMergersandTake-oversTake-OverPurchaseofacontrollinginterestMergerAnamalgamationoftwocompaniestoformasinglecompanyThisdistinctionisnotalwaysclearMergersandTake-oversTake-OveMergersandTake-oversReasonforM&AissynergisticOperatingEconomiesManagementAcquisitionDiversificationAssetBackingQualityofearnings(portfolioimpact)FinanceandliquidityGrowthMarketShare/removalofCompetitionIncreasesEPSEntryintonewmarketTaxDefensiveMergersandTake-oversReasonfMergersandTake-oversTypesofM&AHorizontalVerticalConglomerateMergersandTake-oversTypesofMergersandTake-oversPurchaseConsiderationCash=BuyouttheothershareholdersPaper= Issuingnewshares(Paper)as considerationMergersandTake-oversPurchaseMergersandTake-oversFactorsaffectingtheChoiceAcquiringCompanyDilutionofEPSCosttotheCompanyGearingControlIncreaseinAuthorisedsharecapitalIncreaseinBor