March 7, 2017

Art of M&A: Financing and Refinancing by Alexandra Reed-Lajoux, J. Fred Weston

By Alexandra Reed-Lajoux, J. Fred Weston

"M&A financing and refinancing could be a route to progressÑstarting at the present time, as you learn the tips during this ebook and dream up your own." --Alex Sheshunoff, From the Foreword. the growth of a company via merger or acquisition contains event. knowledge. the facility to examine how or extra mixed businesses can equivalent way over the sum in their elements. It additionally includes, in most cases, using "other people's money." THE artwork OF M&A FINANCING AND REFINANCING tells you ways to procure and pay off that cash, taking the advanced, technical points of M&A finance and making them transparent, comprehensible, and appropriate for your scenario. This finished reference guide issues you to all of the proof, figures, names, and locations you want to finance your subsequent deal. special in that it concentrates exclusively at the so much basic part of the M&A transactionÑmoneyÑ THE paintings OF M&A FINANCING AND REFINANCING offers clear-headed suggestion and information on: the foremost monetary resources and tools you could useÑfor any type of deal; tips to decide on the main acceptable form of financingÑdebt, fairness, or a mix of the 2; Financing through debtÑloans, bonds, and leasesÑand the almost countless how one can borrow or lend; strategies to think about in contracts, together with contingent funds, earn-outs, and fairness kickers; the best way to be certain while refinancing is necessaryÑand plan for it as a likelihood; How unstable international occasions have an effect on fiscal systemsÑand the impression this has on M&A financing and refinancing; Debt/equity hybrids and the autos in which they travelÑincluding mezzanine financing and vendor takeback financing. the power of 1 corporation to procure one other has helped businesses all through background develop improved, extra brilliant, and extra aggressive. simply as your corporation needs to determine pleasurable relationships with exterior owners and providers for its part components and prone, it should also develop into familiar with utilizing exterior financing for development. enable THE artwork OF M&A FINANCING AND REFINANCING make it easier to mix the "Main road" of business banking with the "Wall highway" of funding banking, and assist you remain at the ecocnomic facet of the M&A luck ledger.

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5. 6 billion in 1997 loan dollars financed "future" acquisitions (156 packages). 6. Cash, w e should note, can be from c o m p a n i e s ' treasuries ( w h i c h in larger companies runs in the billions), m a y b e b o r r o w e d , or promised. Factoring in promises, the cash figure m a y be lower, since in s o m e deals "cash" m a y b e in the form of notes—whether straight debt or a p r o m i s e to pay on c o n t i n g e n c y of • good performance. 7. Note also that smaller companies are m o r e likely to pay w i t h cash, and larger companies are more likely to pay with stock.

For instance, the prices and P / E ratios of several dozen property/casualty (P/C) insurance companies can be averaged, and the resulting number used to negotiate a purchase price. But insurance accounting is not uniform from company to company, and historically accurate numbers are difficult to come by, since they were never kept product by product. Allocating the surpluses to the product lines that produced them is a near impossibility, and figuring the incremental costs of fixed and working capital to add $1 of premium inflow on a product-by-product valuation is nearly impossible.

Discount all values (including residual value) to present value, using a risk-adjusted cost of capital for the discount rate. Step 11. Add back all set-aside values (step 1) for current and fixed assets not used to produce revenues. The total is the NPV value of the business. An excellent variation on the DCF approach is cash flow return on investment (CFROI). This approach, which is used by Holt Value Associates in Chicago, Illinois, focuses more on the productivity of assets, using project finance logic, among other tools.

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