VALUATION OF FIRMS IN MERGERS AND ACQUISITIONS企业并购中的估值.pptVIP

VALUATION OF FIRMS IN MERGERS AND ACQUISITIONS OKAN BAYRAK Definitions A merger is a combination of two or more corporations in which only one corporation survives and the merged corporations go out of business. Statutory merger is a merger where the acquiring company assumes the assets and the liabilities of the merged companies A subsidiary merger is a merger of two companies where the target company becomes a subsidiary or part of a subsidiary of the parent company Types of Mergers Horizontal Mergers - between competing companies Vertical Mergers - Between buyer-seller relation-ship companies Conglomerate Mergers - Neither competitors nor buyer-seller relationship History of Mergers and Acquisitions Activity in United States The First Wave 1897-1904 After 1883 depression Horizontal mergers Create monopolies The Second Wave 1916-1929 Oligopolies The Clayton Act of 1914 The Third Wave 1965-1969 Conglomerate Mergers Booming Economy The Fourth Wave 1981-1989 Hostile Takeovers Mega-mergers Mergers of 1990’s Strategic mega-mergers Motives and Determinants of Mergers Synergy Effect Operating Synergy Financial Synergy Diversification Economic Motives Horizontal Integration Vertical Integration Tax Motives FIRM VALUATION IN MERGERS AND ACQUISITIONS Equity Valuation Models Balance Sheet Valuation Models Book Value: the net worth of a company as shown on the balance sheet. Liquidation Value: the value that would be derived if the firm’s assets were liquidated. Replacement Cost: the replacement cost of its assets less its liabilities. FIRM VALUATION IN MERGERS AND ACQUISITIONS-2 Dividend Discount Models FIRM VALUATION IN MERGERS AND ACQUISITIONS-3 The Constant Growth DDM FIRM VALUATION IN MERGERS AND ACQUISITIONS-4 Price-Earnings Ratio FIRM VALUATION IN MERGERS AND ACQUISITIONS-5 Cash Flow Valuation Models The Entity DCF Model : The entity DCF model values the value of a company as the value of a company’s operations less the value