Investment Banking Valuation, Leveraged Buyouts, and Mergers and Acquisitions

ISBN-10: 0470442204

ISBN-13: 9780470442203

Edition: 2009

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 organized M&A sale process, as well as the fundamentals of LBOs.
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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, and Financial Management. He has served as a consultant to over twenty corporations as well as to the U.S. Government, and prior to his academic career, worked as a commercial banker and venture capitalist. Bruner holds a BA from Yale University, and an MBA and DBA from Harvard University.

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
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