Investment Banking Valuation, Leveraged Buyouts, and Mergers and Acquisitions

Name: Investment Banking Valuation, Leveraged Buyouts, and Mergers and Acquisitions
Price: 14.57 USD
Availability: InStock
ISBN: 9780470442203

ISBN-10: 0470442204

ISBN-13: 9780470442203

Edition: 2009

Authors: Joshua Rosenbaum, Joshua Pearl, Joseph R. Perella, Joseph R. Perella

List price: $80.00

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Description:

Investment Banking focuses on the four primary valuation methodologies currently used as the basis of investment banking analysis: Comparable Companies Analysis, Precedent Transactions Analysis, Discounted Cash Flow Analysis, and Leveraged Buyout Analysis. These methodologies are used to determine valuation for public and private companies, most notably for M&A situations, LBOs and IPOs. Using a step-by-step approach for each methodology, the authors build a chronological knowledge base and define key terms and processes throughout the book. They also provide context for the various valuation methodologies through a comprehensive overview of the key process points and considerations for an…

Book details

List price: $80.00
Copyright year: 2009
Publisher: John Wiley & Sons, Incorporated
Publication date: 5/4/2009
Binding: Hardcover
Pages: 336
Size: 7.50" wide x 10.25" long x 1.25" tall
Weight: 1.650
Language: English

ROBERT F. BRUNER is the Distinguished Professor of Business Administration at the Darden School of the University of Virginia and Executive Director of the Batten Institute. He directs the Darden School's executive education course on mergers and acquisitions, and teaches the popular MBA elective on that topic. He is the author of over 250 case studies and a casebook, Case Studies in Finance: Managing for Corporate Value Creation, which has been adopted for use at over 200 schools. Bruner's articles have been published in the Journal of Financial Economics, the Journal of Accounting and Economics, the Journal of Financial and Quantitative Analysis, the Journal of Money, Credit, and Banking,…



About the Authors


Foreword


Acknowledgments


Supplemental Materials


Introduction


Structure of the Book



Valuation (Chapters 1-3)



Leveraged Buyouts (Chapters 4 & 5)



Mergers & Acquisitions (Chapter 6)


Value Co Summary Financial Information



Valuation



Comparable Companies Analysis


Summary of Comparable Companies Analysis Steps



Select the Universe of Comparable Companies


Study the Target


Identify Key Characteristics of the Target for Comparison Purposes


Screen for Comparable Companies



Locate the Necessary Financial Information


SEC Filings: 10-K, 10-Q, 8-K, and Proxy Statements


Equity Research


Press Releases and News Runs


Financial Information Services


Summary of Financial Data Primary Sources



Spread Key Statistics, Ratios, and Trading Multiples


Calculation of Key Financial Statistics and Ratios


Supplemental Financial Concepts and Calculations


Calculation of Key Trading Multiples



Benchmark the Comparable Companies


Benchmark the Financial Statistics and Ratios


Benchmark the Trading Multiples



Determine Valuation


Valuation Implied by EV/EBITDA


Valuation Implied by P/E


Key Pros and Cons


Illustrative Comparable Companies Analysis for ValueCo



Select the Universe of Comparable Companies



Locate the Necessary Financial Information



Spread Key Statistics, Ratios, and Trading Multiples



Benchmark the Comparable Companies



Determine Valuation



Precedent Transactions Analysis


Summary of Precedent Transactions Analysis Steps



Select the Universe of Comparable Acquisitions


Screen for Comparable Acquisitions


Examine Other Considerations



Locate the Necessary Deal-Related and Financial Information


Public Targets


Private Targets


Summary of Primary SEC Filings in M&A Transactions



Spread Key Statistics, Ratios, and Transaction Multiples


Calculation of Key Financial Statistics and Ratios


Calculation of Key Transaction Multiples



Benchmark the Comparable Acquisitions



Determine Valuation


Key Pros and Cons


Illustrative Precedent Transaction Analysis for ValueCo



Select the Universe of Comparable Acquisitions



Locate the Necessary Deal-Related and Financial Information



Spread Key Statistics, Ratios, and Transaction Multiples



Benchmark the Comparable Acquisitions



Determine Valuation



Discounted Cash Flow Analysis


Summary of Discounted Cash Flow Analysis Steps



Study the Target and Determine Key Performance Drivers


Study the Target


Determine Key Performance Drivers



Project Free Cash Flow


Considerations for Projecting Free Cash Flow


Projection of Sales, EBITDA, and EBIT


Projection of Free Cash Flow



Calculate Weighted Average Cost of Capital



Determine Target Capital Structure



Estimate Cost of Debt (r<sub>d</sub>)



Estimate Cost of Equity (r<sub>e</sub>)



Calculate WACC



Determine Terminal Value


Exit Multiple Method


Perpetuity Growth Method



Calculate Present Value and Determine Valuation


Calculate Present Value


Determine Valuation


Perform Sensitivity Analysis


Key Pros and Cons


Illustrative Discounted Cash Flow Analysis for ValueCo



Study the Target and Determine Key Performance Drivers



Project Free Cash Flow



Calculate Weighted Average Cost of Capital



Determine Terminal Value



Calculate Present Value and Determine Valuation



Leveraged Buyouts



Leveraged Buyouts


Key Participants


Financial Sponsors


Investment Banks


Bank and Institutional Lenders


Bond Investors


Target Management


Characteristics of a Strong LBO Candidate


Strong Cash Flow Generation


Leading and Defensible Market Positions


Growth Opportunities


Efficiency Enhancement Opportunities


Low Capex Requirements


Strong Asset Base


Proven Management Team


Economics of LBOs


Returns Analysis - Internal Rate of Return


Returns Analysis - Cash Return


How LBOs Generate Returns


How Leverage is Used to Enhance Returns


Primary Exit/Monetization Strategies


Sale of Business


Initial Public Offering


Dividend Recapitalization


LBO Financing: Structure


LBO Financing: Primary Sources


Bank Debt


High Yield Bonds


Mezzanine Debt


Equity Contribution


LBO Financing: Selected Key Terms


Security


Seniority


Maturity


Coupon


Call Protection


Covenants



LBO Analysis


Financing Structure


Valuation



Locate and Analyze the Necessary Information



Build the Pre-LBO Model



Build Historical and Projected Income Statement through EBIT



Input Opening Balance Sheet and Project Balance Sheet Items



Build Cash Flow Statement through Investing Activities



Input Transaction Structure



Enter Purchase Price Assumptions



Enter Financing Structure into Sources and Uses



Link Sources and Uses to Balance Sheet Adjustments Columns



Complete the Post-LBO Model



Build Debt Schedule



Complete Pro Forma Income Statement from EBIT to Net Income



Complete Pro Forma Balance Sheet



Complete Pro Forma Cash Flow Statement



Perform LBO Analysis



Analyze Financing Structure



Perform Returns Analysis



Determine Valuation



Create Transaction Summary Page


Illustrative LBO Analysis for ValueCo


Transaction Summary


Income Statement


Balance Sheet


Cash Flow Statement


Debt Schedule


Returns Analysis


Assumption Page 1-Income Statement and Cash Flow Statement


Assumption Page 2-Balance Sheet


Assumption Page 3-Financing Structures and Fees



Mergers & Acquisitions



M&A Sale Process


Auctions


Auction Structure


Organization and Preparation


Identify Seller Objectives and Determine Appropriate Sale Process


Perform Sell-Side Advisor Due Diligence and Preliminary Valuation Analysis


Select Buyer Universe


Prepare Marketing Materials


Prepare Confidentiality Agreement


First Round


Contact Prospective Buyers


Negotiate and Execute Confidentiality Agreement with Interested Parties


Distribute Confidential Information Memorandum and Initial Bid Procedures Letter


Prepare Management Presentation


Set up Data Room


Prepare Stapled Financing Package


Receive Initial Bids and Select Buyers to Proceed to Second Round


Second Round


Conduct Management Presentations


Facilitate Site Visits


Provide Data Room Access


Distribute Final Bid Procedures Letter and Draft Definitive Agreement


Receive Final Bids


Negotiations


Evaluate Final Bids


Negotiate with Preferred Buyer(s)


Select Winning Bidder


Render Fairness Opinion


Receive Board Approval and Execute Definitive Agreement


Closing


Obtain Necessary Approvals


Financing and Closing


Negotiated Sale


Bibliography and Recommended Reading


Index