Introduction to Corporate Fina

ISBN-13: 9780470026755 / Angielski / Miękka / 2008 / 248 str.

R. Geddes

Opis

An Introduction to Corporate Finance provides the reader with a complete overview of Corporate Finance from perspective of the investment Banker. The author, a corporate trainer and former investment banker clarifies the role of the investment banker in numerous corporate finance transactions, including mergers & acquisitions, IPO's, and valuation. Given today's corporate climate, every student studying corporate finance and those working in the field need this book to sharpen their skill set.

Spis treści

About the author xv

1 BEHIND THE CHINESE WALL 1

Corporate finance in investment banking 2

Chinese walls 3

Corporate finance assignments 5

Flotations/IPOs 6

Mergers, acquisitions and divestitures 8

Leveraged buyouts and management buyouts 13

Financial advice 13

Careers in corporate finance 15

Organisation of this book 20

Part I CORPORATE FINANCE TRANSACTIONS 23

2 SOURCES OF CAPITAL 25

Debt securities 27

Money market securities 27

Long–term debt 29

Floating rate notes 31

Equity 32

Preference shares 32

Ordinary shares 34

Hybrids (convertible securities) 36

3 FLOTATIONS/INITIAL PUBLIC OFFERINGS 39

Primary offerings 40

Ancillary benefits of flotation 46

Disadvantages of flotation 46

Methods of flotation 47

Suitability for listing 49

The offering process 52

Participants and roles 52

Documentation and regulation 55

Due diligence and verification 57

Marketing, syndication and pricing 59

Underwriting 62

4 INTERNATIONAL EQUITY OFFERINGS 65

Rationale for international offerings 66

International investors 68

Development of international equity offerings 69

Regulation and documentation 70

Depository receipts 73

Marketing, syndication and distribution 75

Offer structure 76

Price setting, underwriting and bookbuilding 77

Fees and commissions 79

After the new issue 81

Stabilisation 81

5 RIGHTS ISSUES/SECONDARY OFFERINGS 83

Pre–emption rights 85

Setting the price 87

Calculating the theoretical rights price 88

Rights issue timetable 90

Fees and commissions 90

Secondary offerings 94

Marketed offerings 95

Bought deals 96

Accelerated bookbuilding 98

Demergers 100

6 MERGERS AND ACQUISITIONS 101

Rationale for M&A 102

Types of merger 104

Merger waves 106

Financing the transaction 107

Bootstrap transactions 109

Regulation of M&As 110

Key elements of the City Code 111

7 MANAGEMENT BUYOUTS 115

Financial structure 118

Bank finance (secured lending) 120

Private equity funds 122

Mezzanine finance 123

High–yield bonds 124

Part II CORPORATE FINANCE TECHNIQUES 127

8 VALUING SECURITIES 129

Valuing bonds 130

Valuing shares and companies 132

Cash flow based valuations 135

Determination of terminal/residual value 139

Determining the discount rate 143

Determining the value of the business 143

Relative valuations 146

Price earnings ratio 148

Price/EBIT multiple 149

Market to book value 149

Dividend yield 150

Enterprise value to EBITDA 151

Determining the value of a business based on ratios/multiples 152

9 DETERMINING THE COST OF CAPITAL 159

Weighted average cost of capital 160

Use market values 161

Use target/optimal weighting 162

After tax 163

Match nominal rates with nominal cash flows 163

Cost of debt: Kd 165

Cost of equity: Ke 166

Capital asset pricing model 168

Risk–free rate 170

Market risk premium (equity risk premium) 170

Beta ( ) 171

Health warning 172

10 SHAREHOLDER VALUE ADDED (ECONOMIC PROFIT) 173

Just another number? 174

Benefits of SVA 175

Calculation of SVA 177

Limitations of economic profit calculations 181

Appendix: UK CORPORATE VALUATION METHODS: A SURVEY 183

Scoring and tables 184

A.1 Valuation methodology 185

A.1.1 Frequency of use 186

A.1.2 Calculation of final valuation or value range 188

A.2 Discounted cash flows 189

A.2.1 DCF approaches 189

A.2.2 Forecast period 190

A.2.3 Terminal value 191

A.3 Cost of capital 192

A.3.1 Determining the cost of equity 192

A.3.2 Capital asset pricing model 193

Sources of information 197

Glossary 199

List of abbreviations 211

Additional reading 213

Index 215

O autorze

Ross Geddes is a practitioner and educator in the corporate finance world. He has over 20 years of experience working on financings (both debt and equity) as well as M&A transactions. During his corporate finance career in Canada and the UK, he helped corporations and governments raise over $7 billion in equity in IPOs, secondary offerings and privatisations. Ross is the author of three other books on finance. He now resides in Canada.

Blurb

In An Introduction to Corporate Finance, Ross Geddes provides a complete overview of the fundamentals of corporate finance from an investment banker s perspective. Split into two distinct sections; the first provides insights into financial advice, careers in corporate finance, sources of capital, mergers and acquisitions, flotations, international equity offerings and rights issues, and management buy–outs. The second section describes the main valuation techniques used to price (or value) companies during the transactions described. It also includes chapters on the determination of the cost of capital and shareholder value.

Written by a former investment banker, this book will be of interest to those currently employed or interested in working in the City of London; whether at an investment bank, law firm, or accountancy firm. Others will want to read this book in order to learn more about some of the most eventful and exciting corporate transactions that make the headlines of the business pages.