Applied International Corporate Finance

Dietmar Ernst; Joachim Häcker

doi:10.15358/9783800644636

Applied International Corporate Finance

2. Auflage 2012

Kein Zugriff

doi.org/10.15358/9783800644636
ISBN print: 978-3-8006-3751-5
ISBN online: 978-3-8006-4463-6
C.H.BECK, München C.H.BECK, München

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Zusammenfassung

Corporate Finance in der Praxis.

The authors present all core aspects of Corporate Finance: M&A, Private Equity, Acquisition Financing, IPO, and Going Private. Furthermore, the techniques Due Diligence and Valuation are scrutinised. The book includes various case studies, which help to get a practical understanding and apply the techniques in the user´s day-to-day business. Investment bankers, lawyers, accountants, experts working in strategic departments, consultants, shareholders, management professionals, professors, and students seeking in-depth knowledge of Corporate Finance will profit from the book`s practice oriented approach.

The information supplement includes

- for students: samples of final written examinations

- for professors: Excel solutions for the final written examinations as well as a course syllabus

- for business professionals: a fully integrated Excel valuation model covering all spreadsheets analyzed in the valuation section of this book

The authors

Dr. Dr. Dietmar Ernst is Professor for International Finance at Nürtingen University (Germany) and Director of the German Institute of Corporate Finance.

Dr. Dr. Joachim Häcker is Professor for Finance at Munich University, the University of Louisville (USA), as well as Director of the German Institute of Corporate Finance.

Kapitel Ausklappen | EinklappenSeiten
I–XXI Titelei/Inhaltsverzeichnis I–XXI
1–63 Part 1: Mergers & Acquisitions (M&A) 1–63
- 1–22 Chapter 1: Why Mergers & Acquisitions? 1–22
  - 1.1 The Term "Mergers & Acquisitions"
    - 1.1.1 Mergers
    - 1.1.2 Acquisitions
    - 1.1.3 M&A and business alliances
      - 1.1.3.1 Forms of business alliances
      - 1.1.3.2 M&A versus business alliances
  - 1.2 Reasons for and success factors of M&A
  - 1.3 M&A of listed companies
    - 1.3.1 Challenges for listed companies
      - 1.3.1.1 Increased public perception
      - 1.3.1.2 Shareholder structure
      - 1.3.1.3 The target company's share price as an uncertainty factor
      - 1.3.1.4 The bidder company's share price as an uncertainty factor
    - 1.3.2 Legal characteristics
      - 1.3.2.1 The regulations of § 93 AktG
      - 1.3.2.2 The regulations of § 15 WpÜG
      - 1.3.2.3 The regulations of § 21 WpHG
    - 1.3.3 Takeover regulations
      - 1.3.3.1 Overview of the "Wertpapiererwerbs- und Übernahmegesetz" (WpÜG) (Security Purchase and Takeover Act)
      - 1.3.3.2 The bid process according to the WpÜG
      - 1.3.3.3 Squeeze out
  - 1.4 The process of M&A
- 23–45 Chapter 2: Initial Phase (Phase 1) 23–45
  - 2.1 Pitch
  - 2.2 Choice of process
    - 2.2.1 The discrete approach
    - 2.2.2 Simultaneous bilateral negotiations
    - 2.2.3 Controlled competitive auction
    - 2.2.4 Full public auction
  - 2.3 Candidate screening and selection
    - 2.3.1 MBO or MBI
    - 2.3.2 Financial investors
    - 2.3.3 Strategic investors
  - 2.4 Advisers
    - 2.4.1 Investment banks
    - 2.4.2 Accountants and tax advisers
    - 2.4.3 Lawyers
    - 2.4.4 Other advisers
  - 2.5 Mandate letter
  - 2.6 Confidentiality agreement
- 46–52 Chapter 3: Contacting Interested Parties (Phase 2) 46–52
  - 3.1 Documentation
    - 3.1.1 Anonymous short profile
    - 3.1.2 Information memorandum
  - 3.2 Non-binding offer
- 53–56 Chapter 4: Financial Aspects in an M&A Sales Process (Phase 3) 53–56
  - 4.1 Due diligence
  - 4.2 Valuation
  - 4.3 Structuring
- 57–63 Chapter 5: Legal Aspects in an M&A Sales Process (Phase 4) 57–63
  - 5.1 Negotiations
  - 5.2 Binding offer
  - 5.3 Purchase agreement and closing
    - 5.3.1 Purchase agreement
    - 5.3.2 Closing
64–167 Part 2: Private Equity 64–167
- 64–81 Chapter 1: What is Private Equity all about? 64–81
  - 1.1 Definitions
  - 1.2 Types of investment financing
    - 1.2.1 Early stage financings (venture capital financings)
      - 1.2.1.1 Seed financing
      - 1.2.1.2 Start-up financing
      - 1.2.1.3 First-stage financing
    - 1.2.2 Later-stage financings (private equity financings)
      - 1.2.2.1 Second-stage financing
      - 1.2.2.2 Third-stage financing
      - 1.2.2.3 Fourth-stage financing
  - 1.3 Occasions for private equity financing
    - 1.3.1 Expansion (development capital)
    - 1.3.2 Bridge financing
    - 1.3.3 Public-to-private (going private)
    - 1.3.4 Succession planning and displacement of existing shareholders
    - 1.3.5 Spin-off
    - 1.3.6 Private placement
    - 1.3.7 Turnaround
    - 1.3.8 Platform strategy or buy and build strategy
  - 1.4 Types of investments
    - 1.4.1 Open investments
    - 1.4.2 Indirect investments
- 82–88 Chapter 2: Who drives Private Equity? 82–88
  - 2.1 Bidder groups for equity capital
    - 2.1.1 Captive funds
    - 2.1.2 Public funds
    - 2.1.3 Independent funds
  - 2.2 The role of banks in the private equity business
  - 2.3 Investors in private equity capital
    - 2.3.1 New funds raised according to capital sources
    - 2.3.2 Geographical distribution in Germany
    - 2.3.3 New funds raised according to financing phases
    - 2.3.4 Sectoral distribution of investment
- 89–117 Chapter 3: How are Private Equity firms organized? 89–117
  - 3.1 Organizational aspects
    - 3.1.1 Structure of private equity companies
      - 3.1.1.1 Separation of fund and management
      - 3.1.1.2 Subsidiaries
    - 3.1.2 Management, control and advisory organs
    - 3.1.3 Inner organization
  - 3.2 The investment contract
    - 3.2.1 Basic types and significant parts of the contract
    - 3.2.2 Examples of wordings for certain clauses
      - 3.2.2.1 Options
      - 3.2.2.2 Pre-emptive right, right of first refusal, duty to supply information on offer
      - 3.2.2.3 Take-along rights of managers
      - 3.2.2.4 Drag-along rights
      - 3.2.2.5 Exit/Liquidation proceeds preference
      - 3.2.2.6 Antidilution clause
      - 3.2.2.7 Concentration of corporate activities
      - 3.2.2.8 Prohibition of competition and solicitation for seller
      - 3.2.2.9 Provisions regarding exit
      - 3.2.2.10 List of transactions requiring consent
      - 3.2.2.11 Reporting duties
    - 3.2.3 Adoption of existing contracts, important side contracts and covenants
    - 3.2.4 Combined investment contracts
    - 3.2.5 Participation in advisory and control organs
  - 3.3 Valuation of private equity investments
    - 3.3.1 Measuring performance: the internal rate of return (IRR)
      - 3.3.1.1 Derivation of the IRR
      - 3.3.1.2 Calculating the IRR using standard spreadsheet software
      - 3.3.1.3 Three levels of IRR advocated by EVCA
    - 3.3.2 Valuation principles and methodologies
      - 3.3.2.1 Valuation principles
      - 3.3.2.2 Valuation methodologies
- 118–167 Chapter 4: How is Private Equity Business done? 118–167
  - 4.1 The working approach of private equity companies
    - 4.1.1 Organizational milestones
      - 4.1.1.1 Recruiting
      - 4.1.1.2 Fund raising
    - 4.1.2 Project-oriented milestones
      - 4.1.2.1 Deal-flow
      - 4.1.2.2 Due diligence
      - 4.1.2.3 Business plan
      - 4.1.2.4 Investment negotiations
      - 4.1.2.5 Investment support
      - 4.1.2.6 Exit
  - 4.2 Acquisition policy and risk management
    - 4.2.1 Quality controls in the project examination area
    - 4.2.2 Setting of competences and decision levels
    - 4.2.3 Selection of projects according to the criteria of company size
    - 4.2.4 Risk limitation through syndication
    - 4.2.5 Risk limitation through specialization
  - 4.3 Investment purchase abroad
  - 4.4 EVCA governing principles
    - 4.4.1 Governing principles
    - 4.4.2 Examples
      - 4.4.2.1 Initial considerations
        4.4.2.1.1 Early stage planning
        4.4.2.1.2 Investors and marketing
        4.4.2.1.3 Structuring
      - 4.4.2.2 Fundraising
        4.4.2.2.1 Initiators
        4.4.2.2.2 Target investors
        4.4.2.2.3 Origin of funds
        4.4.2.2.4 Investors
        4.4.2.2.5 Structure of the offer: terms of investment
        4.4.2.2.6 Structure of the documentation
        4.4.2.2.7 Presentation to investors
        4.4.2.2.8 Track records and forecasts
        4.4.2.2.9 Time period for fundraising
      - 4.4.2.3 Investing
        4.4.2.3.1 Due diligence
        4.4.2.3.2 Investment decision
        4.4.2.3.3 Structuring investment
        4.4.2.3.4 Possible means by which the fund may influence an investee business
        4.4.2.3.5 Investment agreements and documents
        4.4.2.3.6 Manager's consent to investee business actions
        4.4.2.3.7 Cooperation with co-investors and syndicate partners
        4.4.2.3.8 Co-investment and parallel investment by the manager and executives
        4.4.2.3.9 Co-investment and parallel investments by fund investors and other third parties
        4.4.2.3.10 Divestment planning
      - 4.4.2.4 Management of an investment
        4.4.2.4.1 Investment monitoring
        4.4.2.4.2 Exercise of investor consents
        4.4.2.4.3 Follow-on investments
        4.4.2.4.4 Under-performing investments
        4.4.2.5 Disposal of an investment
        4.4.2.5.1 Implementation of divestment planning
        4.4.2.5.2 Responsibility for divestment decision-making
        4.4.2.5.3 Warranties and indemnities
        4.4.2.5.4 Should cash always be taken on realization or can shares/earn-outs be accepted?
        4.4.2.5.5 Sales to another fund managed by the same manager
        4.4.2.5.6 Managing quoted investments
        4.4.2.6 Distribution
        4.4.2.6.1 Distribution provisions in constitution
        4.4.2.6.2 Timing of distributions
        4.4.2.7 Investor relations
        4.4.2.7.1 Reporting obligations
        4.4.2.7.2 Transparency
        4.4.2.7.3 Investor relations
        4.4.2.7.4 Investors' committee
        4.4.2.8 Winding up of a fund
        4.4.2.8.1 Liquidation
        4.4.2.8.2 Fund documentation
        4.4.2.9 Management of multiple funds
        4.4.2.9.1 Conflicts of interest
        4.4.2.9.2 Establishment of new funds
        4.4.2.10 Manager's internal organization
        4.4.2.10.1 Human resources
        4.4.2.10.2 Incentivization
        4.4.2.10.3 Financial resources
        4.4.2.10.4 Procedures and organization
        4.4.2.10.5 Segregation of fund assets
        4.4.2.10.6 Internal reviews and controls
        4.4.2.10.7 External assistance
        4.4.2.11 List of questions addressed in 'Examples' section
168–243 Part 3: Acquisition Financing 168–243
- 168–173 Chapter 1: What makes acquisition financing special? 168–173
  - 1.1 Definition and challenges
  - 1.2 The challenges of acquisition financing
  - 1.3 Acquisition financing vs.buy-out/buy-in financing
    - 1.3.1 Management buy-out (MBO)
    - 1.3.2 Management buy in (MBI)
    - 1.3.3 Leveraged buy-out (LBO)
- 174–181 Chapter 2: Who drives acquisition financing? 174–181
  - 2.1 Acquisition financing – parties involved and their various motives
    - 2.1.1 Senior partners
    - 2.1.2 Strategic investors
    - 2.1.3 Financial investors (private equity investors)
    - 2.1.4 Management
    - 2.1.5 Financial institutions
    - 2.1.6 Advisors
  - 2.2 Main goals of debt capital investors
    - 2.2.1 Low debt capital ratio
    - 2.2.2 Collateral
    - 2.2.3 Marketability – loan syndication
    - 2.2.4 Return on debt
  - 2.3 Main goals of equity capital investors
    - 2.3.1 Return on equity
    - 2.3.2 Limited liability
    - 2.3.3 Contract flexibility
    - 2.3.4 Minimum expenses
- 182–194 Chapter 3: How does acquisition financing work? 182–194
  - 3.1 Functionality of leveraged buy-outs
  - 3.2 Exploiting the leverage effect
  - 3.3 Improvement of cash flows
    - 3.3.1 Fixed assets and working capital optimization
    - 3.3.2 Strategic reorientation of the enterprise
    - 3.3.3 Efficient capital allocation
    - 3.3.4 Know-how transfer by financial investors
    - 3.3.5 Elimination of underperformance in the enterprise
    - 3.3.6 Asset stripping
  - 3.4 Improvement of company valuation
    - 3.4.1 Increase purchase price multiple due to improved returns and profits
    - 3.4.2 Increase purchase price multiple due to an optimized firm size
  - 3.5 Integral parts of successful leveraged buy-outs
    - 3.5.1 Attractive LBO market environment
    - 3.5.2 LBO proficient company
    - 3.5.3 Exit possibilities and increase in company value
    - 3.5.4 Management
    - 3.5.5 Track record and firm ethics of financial investor
    - 3.5.6 Fair price
    - 3.5.7 Fiscal optimization
    - 3.5.8 Feasible and sustainable financing structure
- 195–202 Chapter 4: How to structure an acquisition 195–202
  - 4.1 Acquisition financing – structuring the project under company law
    - 4.1.1 Three-step takeover approach
    - 4.1.2 Respective interests of equity capital investors
    - 4.1.3 Respective interests of debt capital investors
    - 4.1.4 Legal restrictions
  - 4.2 Asset deal vs.share deal
  - 4.3 Acquisition financing – structuring the financing tools
- 203–226 Chapter 5: How to determine the financial structure of an acquisition financing 203–226
  - 5.1 Determination of the debt service ability
  - 5.2 Acquisition financing – role of equity capital
    - 5.2.1 Share capital
    - 5.2.2 Shareholder loans
  - 5.3 Acquisition financing – role of outside capital
    - 5.3.1 Senior term debt
    - 5.3.2 Working capital facilities
  - 5.4 Mezzanine capital
    - 5.4.1 Particular characteristics of mezzanine capital
    - 5.4.2 Mezzanine capital in the context of acquisition financings
      - 5.4.2.1 Mezzanine capital – bridging the gap
      - 5.4.2.2 Mezzanine capital – payment structure and yield expectations
      - 5.4.2.3 Mezzanine capital – contractual structuring
    - 5.4.3 Different forms of mezzanine capital
      - 5.4.3.1 Equity mezzanine instruments
      - 5.4.3.2 Debt mezzanine instruments
  - 5.5 Capital structure and key figures
- 227–234 Chapter 6: What kind of contracts are used in acquisition financing? 227–234
  - 6.1 Credit agreement
    - 6.1.1 Precedent conditions
    - 6.1.2 Representations and warranties
    - 6.1.3 Covenants
  - 6.2 Collateral agreement
  - 6.3 Consortium agreement
  - 6.4 Intercreditor agreement
  - 6.5 Purchase agreement
- 235–243 Chapter 7: How is acquisition financing done? 235–243
  - 7.1 Pre-deal screening
    - 7.1.1 Business plan
    - 7.1.2 Due diligence
    - 7.1.3 Financing case
    - 7.1.4 Financing structure and term sheet
    - 7.1.5 Commitment letter
    - 7.1.6 Contract documentation
    - 7.1.7 Syndication
    - 7.1.8 Deal signing and closing
  - 7.2 Post-deal monitoring
244–307 Part 4: Initial Public Offering 244–307
- 244–255 Chapter 1: Why Initial Public Offering? 244–255
  - 1.1 Definition and reasons for an IPO
  - 1.2 Pros and cons
    - 1.2.1 Benefits and opportunities
    - 1.2.2 Drawbacks and continuing obligations
  - 1.3 Pre-IPO strategy
- 256–307 Chapter 2: What is the roadmap for a successful IPO? 256–307
  - 2.1 Phase one: planning and preparation
    - 2.1.1 Checking the pre-requisites for going public
      - 2.1.1.1 Stock corporation
      - 2.1.1.2 Financial reporting
      - 2.1.1.3 Business plan
    - 2.1.2 Equity story
    - 2.1.3 Issue concept
  - 2.2 Phase two: structuring
    - 2.2.1 Recruiting syndicate banks
      - 2.2.1.1 Coordinators
      - 2.2.1.2 Syndicate structure
      - 2.2.1.3 Designations
      - 2.2.1.4 Beauty contest and selection criteria
      - 2.2.1.5 Agreements with coordinators
      - 2.2.1.6 Underwriting commissions
    - 2.2.2 IPO consultants
    - 2.2.3 Legal advisers
    - 2.2.4 Auditors and tax advisers
    - 2.2.5 IR/PR agencies
    - 2.2.6 Due diligence
    - 2.2.7 Valuation
    - 2.2.8 Prospectus
    - 2.2.9 Corporate governance
  - 2.3 Phase three: marketing: investor relations, pre-marketing, and road show
    - 2.3.1 Investor relations
    - 2.3.2 Pre-marketing
      - 2.3.2.1 Analyst meetings
      - 2.3.2.2 Research
    - 2.3.3 Road show
  - 2.4 Phase four: pricing, allocation and stabilisation
    - 2.4.1 Pricing
      - 2.4.1.1 Pricing methods
        2.4.1.1.1 Fixed-price method
        2.4.1.1.2 Bookbuilding
      - 2.4.1.2 Pricing structure
      - 2.4.1.3 Pricing mechanism
    - 2.4.2 Allocation
      - 2.4.2.1 Allocation to institutional investors
      - 2.4.2.2 Allocation to retail investors
      - 2.4.2.3 Employee equity compensation programs
      - 2.4.2.4 Friends & family program
    - 2.4.3 Stabilization
      - 2.4.3.1 Greenshoe (over-allotment option)
      - 2.4.3.2 Naked short
      - 2.4.3.3 Naked long
  - 2.5 Phase five: life as a public company
    - 2.5.1 Ad-hoc disclosures
    - 2.5.2 Insider information and compliance
    - 2.5.3 Transparency for capital markets
    - 2.5.4 Annual financial statements and quarterly reports
    - 2.5.5 Analyst conferences and research
    - 2.5.6 Corporation action timetable
  - 4.5.7 Investor relations
308–328 Part 5: Going Private 308–328
- 308–317 Chapter 1: Why go private? 308–317
  - 1.1 Definition of going private
  - 1.2 Going private and going dark
    - 1.2.1 Going dark
    - 1.2.2 Similarities and differences between going private and going dark
  - 1.3 Motives and success factors for going private
    - 1.3.1 Reasons for going private
    - 1.3.2 Benefits of going private
    - 1.3.3 Risks of going private
  - 1.4 Candidates for going private transactions
  - 1.5 Recent transactions in the U.S., U.K. and Germany
- 318–328 Chapter 2: Going private in Germany 318–328
  - 2.1 What is the legal framework of going private transactions in Germany?
  - 2.2 How can delisting be done?
    - 2.2.1 Ex officio delisting
    - 2.2.2 Hot delisting
    - 2.2.3 Cold delisting
      - 2.2.3.1 Squeeze-out
      - 2.2.3.2 Integration
      - 2.2.3.3 Conversion, merger and corporate division
      - 2.2.3.4 Liquidation and sale of all assets
329–355 Part 6: Due Diligence 329–355
- 329–334 Chapter 1: Why Due Diligence? 329–334
  - 1.1 Definition of the term due diligence
  - 1.2 Motives for conducting a due diligence
  - 1.3 Objectives of the due diligence process
    - 1.3.1 Reducing the information asymmetry
    - 1.3.2 Identifying and examining the synergy potential
    - 1.3.3 Linking the strategic preparation with the integration period
    - 1.3.4 Providing reps and warranties
  - 1.4 Participants in the due diligence process
  - 1.5 Information sources for conducting due diligence
    - 1.5.1 Internal sources of information
      - 1.5.1.1 The data room
      - 1.5.1.2 Interviewing the management
      - 1.5.1.3 Site visits
    - 1.5.2 External sources of information
- 335–340 Chapter 2: What is a data room? 335–340
  - 2.1 The data room
  - 2.2 Data room checklist
    - 2.2.1 Corporate organization
    - 2.2.2 Employees
    - 2.2.3 Litigation
    - 2.2.4 Pensions
    - 2.2.5 Taxation
    - 2.2.6 Agreements
    - 2.2.7 Insurances
    - 2.2.8 Financial documents
    - 2.2.9 Intellectual property
    - 2.2.10 Property
    - 2.2.11 Products/services/technology
- 341–355 Chapter 3: What is done in a due diligence? 341–355
  - 3.1 The strategic audit
    - 3.1.1 Assessing the target company's forecasting process
    - 3.1.2 Steps for formulating a business plan
    - 3.1.3 What happens with the business plan?
    - 3.1.4 Challenging the business plan
  - 3.2 The financial audit
    - 3.2.1 Assessing internal controls
    - 3.2.2 Assessing annual reports
  - 3.3 The legal audit
    - 3.3.1 The legal foundation
    - 3.3.2 The legal risk factors
    - 3.3.3 The internal legal structure
    - 3.3.4 The external legal structure
  - 3.4 Conducting a tax due diligence
    - 3.4.1 The scope of the tax due diligence
    - 3.4.2 Past periods that were not covered by tax audits
356–513 Part 7: An Overview of Corporate Valuation 356–513
- 356–362 Chapter 1: Why Valuation? 356–362
  - 1.1 Valuation methods at a glance
  - 1.2 Occasions and purposes of valuation
  - 1.3 General framework
    - 1.3.1 Valuation: art or science?
    - 1.3.2 Value vs.price
- 363–368 Chapter 2: How to carry out a valuation 363–368
  - 2.1 Valuation techniques
  - 2.2 Methods of individual valuation
    - 2.2.1 Net asset value based on reproduction values
    - 2.2.2 Net asset value based on liquidation values
  - 2.3 The Automotive Supplier Case Study
- 369–429 Chapter 3: The DCF method 369–429
  - 3.1 Overview of the various DCF approaches
    - 3.1.1 The WACC approach
    - 3.1.2 Adjusted present value (APV) approach
    - 3.1.3 Equity approach (net approach)
  - 3.2 Calculation of the cash flows and terminal value
    - 3.2.1 Calculation of the operating free cash flows according to the WACC approach and the APV approach
    - 3.2.2 Calculation of the flows to equity in the equity approach
    - 3.2.3 Calculation of the terminal value
      - 3.2.3.1 The two-phase model for the determination of the value of a company with infinite lifetime
      - 3.2.3.2 Determination of the terminal value
      - 3.2.3.3 Determination of the detail planning horizon (detail planning period)
  - 3.3 Determination of the discount rate
    - 3.3.1 Determination of the discount rate subject to the respective DCF method
    - 3.3.2 Determination of the market value-weighted capital structure
      - 3.3.2.1 Determination of the current capital structure
      - 3.3.2.2 Target capital structure
    - 3.3.3 Cost of equity
      - 3.3.3.1 Determination of the interest rate of a risk-free investment
      - 3.3.3.2 Risk premium
        3.3.3.2.1 Systematization of risks
        3.3.3.2.2 Determination of the risk premium with the help of capital market theory models
        3.3.3.2.2.1 Market risk premium
        3.3.3.2.2.2 Significance of the Beta factor
        3.3.3.2.2.3 Structure of the Beta factor (dependence of the Beta factor on the leverage)
        3.3.3.2.2.4 Determination of the Beta factor out of past values
        3.3.3.2.2.5 Beta factors for non-publicly listed companies
        3.3.3.2.2.6 Determination of Beta factors for conglomerates
        3.3.3.2.2.7 Estimation of future Beta factors
        3.3.3.2.2.8 Model assumptions of the CAPM
        3.3.3.2.3 Agios in the calculation of the risk premium
        3.3.3.2.3.1 Agios for the unsystematic risk
        3.3.3.2.3.2 Mobility agio (liquidity agio, fungibility agio)
        3.3.3.2.3.3 Agio for personal liability
        3.3.3.2.3.4 Majority disagio (package agio)
    - 3.3.4 Cost of debt
      - 3.3.4.1 But where can the information on the risk premium which is currently valid in the market be obtained?
  - 3.4 Calculation of the enterprise value
  - 3.5 Period-specific WACC
- 430–494 Chapter 4: The trading multiples method 430–494
  - 4.1 Basic principle and procedure
    - 4.1.1 The procedure of multiples valuation
    - 4.1.2 Creation of multiples
    - 4.1.3 Calculation of the company value
  - 4.2 Presentation of the different multiples
    - 4.2.1 Equity value vs.entity value multiples
    - 4.2.2 Trading vs.transaction multiples
    - 4.2.3 Overview of the different multiples
    - 4.2.4 Multiples based on balance sheet figures – price-book-value
    - 4.2.5 Multiples based on profit & loss statement figures
      - 4.2.5.1 Sales multiples
      - 4.2.5.2 EV/EBITDA multiple
      - 4.2.5.3 EV/EBITA multiple
      - 4.2.5.4 EV/EBIT multiple
      - 4.2.5.5 Price-earnings-ratio
    - 4.2.6 Cash flow multiples
    - 4.2.7 Non-financial multiples
    - 4.2.8 Consideration of growth
  - 4.3 Calculation of the multiples of the peer companies
    - 4.3.1 Selection of the peer companies
    - 4.3.2 Selection of the valuation period
    - 4.3.3 Selection of the multiple
    - 4.3.4 Collection and preparation of the information
      - 4.3.4.1 Market value of the equity and enterprise value
      - 4.3.4.2 Determination of the reference figures: annual report figures
      - 4.3.4.3 Determination of the reference figures: estimations
    - 4.3.5 Information preparation and multiples calculation based on the example of Beru AG
      - 4.3.5.1 Market value of the equity
      - 4.3.5.2 Enterprise value
      - 4.3.5.3 Calculation of past-oriented multiples
        4.3.5.3.1 Determination of the reference figures of the single multiples from the annual report figures
        4.3.5.3.2 Calculation of the multiples
      - 4.3.5.4 Calculation of future-oriented multiples
        4.3.5.4.1 Collection of the estimations
        4.3.5.4.2 Verification of the estimations
        4.3.5.4.3 Interpolation in case of a business year deviating from the calendar year
        4.3.5.4.4 Calculation of the multiples
    - 4.3.6 Market value vs.book value for minority interests and non-fully consolidated participations
      - 4.3.6.1 Consideration of minority interests in the example of Peugeot and Faurecia
      - 4.3.6.2 Consideration of non-consolidated participations based on the example of Renault and Nissan
  - 4.4 Multiples valuation for Automotive Supplier GmbH
    - 4.4.1 Determination of the peer companies' multiples
    - 4.4.2 Aggregation of the multiples
    - 4.4.3 Calculation of the company value of Automotive Supplier GmbH
- 495–513 Chapter 5: The transaction multiples method 495–513
  - 5.1 Valuation conception
  - 5.2 Prevalence and application of the valuation method
  - 5.3 Thoughts on the practical application of transaction multiples
    - 5.3.1 Preferred multiples
    - 5.3.2 Determination of relevant comparable transactions
      - 5.3.2.1 Company-specific factors
      - 5.3.2.2 Transaction-specific factors
    - 5.3.3 Data collection and calculation
      - 5.3.3.1 Calculation of the transaction multiples
      - 5.3.3.2 Financial data of the valuation object
  - 5.4 Sector-specific issues and regional differences
    - 5.4.1 The relevance of the sector and the regional presence for transaction multiples
    - 5.4.2 Reasons and implications
  - 5.5 Takeover premiums
    - 5.5.1 Significance of the takeover premium
    - 5.2.2 Reasons for takeover premiums
      - 5.2.2.1 Undervaluation of the target company
      - 5.2.2.2 Compensation of synergy effects
      - 5.2.2.3 Manager hybris
      - 5.5.2.4 Control premium
      - 5.2.2.5 Bidder competition vs.exclusive negotiations
  - 5.6 Case study
  - 5.7 Critique of the valuation methodology
514–515 Index 514–515

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