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Valuation for Mergers and Acquisitions, Second Edition

Book Description

Master the latest insights, lessons, and best practice techniques for accurately valuing companies for potential mergers, acquisitions, and restructurings. Concise, realistic, and easy to use, Valuation for Mergers and Acquisitions, Second Edition has been fully updated to reflect the field's latest and most useful "rules of thumb," compare every modern approach to valuation, offering practical solutions for today's most complex and important valuation challenges. Treating valuation as both an art and a science, it covers the entire process, offering up-to-the-minute real-world advice, examples, and case studies. Leading valuation experts Barbara S. Petitt and Kenneth R. Ferris introduce and compare leading techniques including discounted cash flow analysis, earnings multiples analysis, adjusted present value analysis, economic value analysis, and real option analysis. They fully address related concerns such as the accounting structure of deals, accounting for goodwill, tax considerations, and more. Throughout, they identify common errors that lead to inaccurate valuation, and show how to avoid them. From start to finish, this guide doesn't just make valuation comprehensible: it provides the tools and insight to make valuation work.

For all financial professionals concerned with valuation, especially those involved in potential mergers, acquisitions, and restructurings; and for corporate finance instructors and students in Executive MBA programs concerned with valuation.

Table of Contents

  1. About This eBook
  2. Title Page
  3. Copyright Page
  4. Contents
  5. About the Authors
  6. Preface
  7. 1. Valuation: An Overview
    1. Market View
    2. 1. Why Companies Merge or Acquire: A Historical Perspective
    3. 2. Do Mergers and Acquisitions Create Shareholder Value?
    4. 3. Merger and Acquisition Premiums
    5. 4. Valuation Process
    6. 5. Valuation Methods: An Overview
    7. Summary
    8. Endnotes
  8. 2. Financial Review and Pro Forma Analysis
    1. Market View
    2. 1. Financial Review
    3. 2. Pro Forma Analysis
    4. Summary
    5. Endnotes
    6. Appendix 2A: Mattels’ Financial Statements
    7. Appendix 2B: Preparation of a Cash Flow Statement
    8. Summary
    9. Appendix 2C: Account Forecasting Alternatives
  9. 3. Traditional Valuation Methods
    1. Market View
    2. 1. Earnings Multiples
    3. 2. Discounted Cash Flow Models
    4. Summary
    5. Endnotes
    6. Appendix 3: Some Frequently Asked Questions and Answers About the Free Cash Flow to the Firm Model and Earnings Multiples
  10. 4. Alternative Valuation Methods
    1. Market View
    2. 1. Relative Valuation Methods
    3. 2. Direct Valuation Methods
    4. Summary
    5. Endnotes
    6. Appendix 4: How to Use the Black-Scholes Model to Value a Real Option
    7. Black-Scholes Model
    8. Luehrman’s NPVq/Cumulative Volatility Approach
  11. 5. Accounting Dilemmas in Valuation Analysis
    1. Market View
    2. 1. Assessing Economic Reality
    3. 2. Income Statement Transformations: Forecasting Permanent Earnings and Free Cash Flows
    4. 3. Balance Sheet Transformations: Forecasting the Equity Value of a Company
    5. 4. Cash Flow Statement Transformations: Forecasting CFFO and Free Cash Flow
    6. Summary
    7. Endnotes
  12. 6. Financial Reporting and Tax Considerations for Mergers and Acquisitions
    1. Market View
    2. 1. Financial Reporting: To Combine or Not to Combine?
    3. 2. Consolidated Financial Reporting: Purchase Accounting
    4. 3. Noncontrolling Interest
    5. 4. Accounting for Goodwill
    6. 5. Tax Considerations of Mergers and Acquisitions
    7. 6. Tax Considerations of Goodwill
    8. Summary
    9. Endnotes
  13. 7. Some Final Thoughts
    1. Market View
    2. 1. Valuation: A Debriefing
    3. 2. Some Caveats to Consider
    4. 3. Closure
    5. Endnote
  14. Bibliography
  15. Index
  16. FT Press