Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
56 Z. Chen and P. Xiong, “Discounts on Illiquid Stocks: Evidence from China,” working paper, Yale University, 2001. 57 S.S.Wanga ...
LandValues,”workingpaper,FederalReserveBankofSan Francisco, 2004. 64 Inrecentyears,someappraisershaveshiftedtousingthe discounts ...
price of $50 will have substantial value, eventhough the underlyingstockiscompletelyliquid.Thevaluehasnothing todowithliquidityb ...
76 Ifthecashisheldbackinthefirm(ratherthanwasted),it willaddtotheterminalvalueandthevalueofthefirmshould not be affected. 77 The ...
explained by the failure to consider the greater cost of illiquidity in these periods. 82 A.W.Butler,G.Grullon,andJ.P.Weston,“St ...
CHAPTER 15 The Value of Synergy WhenCarlyFiorinaarguedforHewlett-Packard’sacquisition ofCompaq,sheofferedanumberofreasonsthedeal ...
isthemostwidelyusedandmisusedrationaleinmergersand acquisitions.Inthissection,weconsiderthepotentialsources ofsynergyand categor ...
firmsisfar morelikely tocreateanoligopolywith pricing power. 1 3.Combinationofdifferentfunctionalstrengths,aswouldbe thecasewhen ...
otherwise would not have been undertaken. This synergyislikelytoshowupmostoftenwhenlarge firmsacquiresmallerfirms,orwhenpublicly ...
The key question about synergy is not whether itcan be valuedbuthowitshouldbevalued.Afterall,firmsthatare willingtopaylargeamoun ...
thelengthofthegrowthperiod?Synergy,tohaveaneffecton value, has to influence one of the four inputs into the valuationprocess—ith ...
Itisimportantatthisstagethatwekeepthevalueofsynergy apart fromthe valueof control,which isthe otherwidely cited reason for acqui ...
ComponentValuation Guidelines Control premium Value the company as if optimally managed. This will usually mean that premium inv ...
payingtherightpricefora targetfirm.InFigure15.1, we breakthepricepaidonanacquisitionintoamarketpriceand apremiumoverthatprice.No ...
beworth$2billion,butpaying$3billionasapremiumtoget theacquisitiondonewilldestroy$1billionoftheacquiring company’s stockholder we ...
Thecombined firmmay be ableto earnhigher returnsonitsinvestmentsthanthefirmswereableto generate independently, thus increasing ...
Acquiring FirmTarget Firm Pretax cost of debt 5% 5% Tax rate 30% 30% Debt-to-capital ratio 10% 10% Revenues $1,000 $500 Operatin ...
Theexpectedgrowthrateforthenextfiveyearsistheproduct ofthereinvestmentrateandtheaftertaxreturnoncapital.The valueofthecombinedfi ...
reinvestment rate remains unchanged, as do the other assumptions in the valuation. The value of synergy is estimated in the foll ...
The higher reinvestment rate pushes up expected growth during the high-growth period and generates a value for synergy of $24.02 ...
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