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Preface | |
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Dedication and Acknowledgmentsxv | |
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Winning through Merger and Acquisition | |
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Critical Values Shareholders Overlook | |
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Stand-alone Fair Market Value | |
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Investment Value to Strategic Buyers | |
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"Win-Win": Benefits of Merger and Acquisition | |
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Building Value and Measuring Return on Investment in a Private Company | |
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Public Company Value Creation Model | |
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Computing Private Company Value Creation and ROI | |
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Analyzing Value Creation Strategies | |
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Competitive Analysis | |
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Linking Strategic Planning to Building Value | |
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Assessing Specific-Company Risk | |
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Competitive Factors Frequently Encountered in Nonpublic Entities | |
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Financial Analysis | |
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Conclusion | |
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Merger and Acquisition Market and Planning Process | |
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Common Seller and Buyer Motivations | |
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Why Mergers and Acquisitions Fail | |
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Sales Strategy and Process | |
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Acquisition Strategy and Process | |
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Due Diligence Preparation | |
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Measuring Synergies | |
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Synergy Measurement Process | |
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Key Variables in Assessing Synergies | |
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Synergy and Advance Planning | |
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Exit Planning | |
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Why Is Exit Planning So Difficult? | |
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What Makes Planning for Your Private Company Investment Unique? | |
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Why Should Exit Planning for Your Private Company Begin Now? | |
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Exit Planning Process | |
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Setting Exit Goals | |
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Owner Readiness | |
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Type of Exiting Owner | |
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Exit Options | |
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Range of Values | |
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Execution of Exit Plan | |
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Valuation Approaches and Fundamentals | |
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Business Valuation Approaches | |
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Using the Invested Capital Model to Define the Investment Being Appraised | |
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Why Net Cash Flow Measures Value Most Accurately | |
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Frequent Need to Negotiate from Earnings Measures | |
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Financial Statement Adjustments | |
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Managing Investment Risk in Merger and Acquisition | |
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Conclusion | |
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Income Approach: Using Rates and Returns to Establish Value | |
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Why Values for Merger and Acquisition Should Be Driven by the Income Approach | |
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Two Methods within the Income Approach | |
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Three-Stage DCF Model | |
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Establishing Defendable Long-term Growth Rates and Terminal Values | |
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Cost of Capital Essentials for Accurate Valuations | |
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Cost of Debt Capital | |
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Cost of Preferred Stock | |
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Cost of Common Stock | |
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Fundamentals and Limitations of the Capital Asset Pricing Model | |
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Modified Capital Asset Pricing Model | |
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Build-up Model | |
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Summary of Ibbotson Rate of Return Data | |
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Private Cost of Capital | |
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International Cost of Capital | |
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How to Develop an Equity Cost for a Target Company | |
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Weighted Average Cost of Capital | |
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Iterative Weighted Average Cost of Capital Process | |
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Shortcut Weighted Average Cost of Capital Formula | |
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Common Errors in Computing Cost of Capital | |
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Market Approach: Using Guideline Companies and Strategic Transactions | |
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Merger and Acquisition Transactional Data Method | |
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Guideline Public Company Method | |
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Selection of Valuation Multiples | |
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Market Multiples Commonly Used | |
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Asset Approach | |
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Book Value versus Market Value | |
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Premises of Value | |
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Use of the Asset Approach to Value Lack-of-Control Interests | |
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Adjusted Book Value Method | |
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Treatment of Nonoperating Assets or Asset Surpluses or Shortages | |
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Specific Steps in Computing Adjusted Book Value | |
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Adjusting Value through Premiums and Discounts | |
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Applicability of Premiums and Discounts | |
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Application and Derivation of Premiums and Discounts | |
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Apply Discretion in the Size of the Adjustment | |
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Control versus Lack of Control in Income-driven Methods | |
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Fair Market Value versus Investment Value | |
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Reconciling Initial Value Estimates and Determining Value Conclusion | |
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Essential Need for Broad Perspective | |
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Income Approach Review | |
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Market Approach Review | |
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Asset Approach Review | |
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Value Reconciliation and Conclusion | |
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Checks to Value | |
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Candidly Assess Valuation Capabilities | |
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Art of the Deal | |
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Unique Negotiation Challenges | |
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Deal Structure: Stock versus Assets | |
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Terms of Sale: Cash versus Stock | |
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Bridging the Gap | |
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See the Deal from the Other Side | |
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M&A and Financial Reporting | |
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U.S. GAAP and IFRS | |
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Relevant FASB and IFRS Statements | |
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Reviews by the Audit Firm | |
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ASC 820: Fair Value Measurements (SFAS 157) | |
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ASC 805: Business Combinations (SFAS 141(R)) | |
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ASC 350: Goodwill and Other Intangible Assets (SFAS 142) | |
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Incorporating ASC 805 (SFAS 141(R)) into the Due Diligence Process | |
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References | |
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Intangible Asset Valuation | |
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Approaches to Valuing Intangible Assets | |
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Key Components to Intangible Asset Valuation | |
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Intangible Asset Valuation Methods | |
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Conclusion | |
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Measuring and Managing Value in High-Tech Start-ups | |
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Why Appraisals of High-Tech Start-ups Are Essential | |
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Key Differences in High-Tech Start-ups | |
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Value Management Begins with Competitive Analysis | |
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Stages of Development | |
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Risk and Discount Rates | |
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Start-ups and Traditional Valuation Methods | |
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QED Survey of Valuation Methods Used by Venture Capitalists | |
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A Probability-Weighted Scenario Method to Value Start-ups | |
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Equity Allocation Methods | |
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Conclusion | |
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Cross-Border M&A | |
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Strategic Buy-Side Considerations | |
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Due Diligence | |
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Sell-Side Considerations | |
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Merger and Acquisition Valuation Case Study | |
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History and Competitive Conditions | |
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Potential Buyers | |
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General Economic Conditions | |
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Specific Industry Conditions | |
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Growth | |
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Computation of the Stand-alone Fair Market Value | |
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Computation of Investment Value | |
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Suggested Considerations to Case Conclusion | |
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About the Authors | |
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Index | |