HIGHLYLEVERAGEDTRANSACTIONSLBOValuationand.pptVIP

* * * * * * * * * * * * * * * * * * * * * * HIGHLY LEVERAGED TRANSACTIONS:LBO Valuation and Modeling Basics A billion here and a billion there soon adds up to real money. —Everett Dirksen Exhibit 1: Course Layout: Mergers, Acquisitions, and Other Restructuring Activities Part IV: Deal Structuring and Financing Part II: MA Process Part I: MA Environment Ch. 11: Payment and Legal Considerations Ch. 7: Discounted Cash Flow Valuation Ch. 9: Financial Modeling Techniques Ch. 6: MA Postclosing Integration Ch. 4: Business and Acquisition Plans Ch. 5: Search through Closing Activities Part V: Alternative Business and Restructuring Strategies Ch. 12: Accounting Tax Considerations Ch. 15: Business Alliances Ch. 16: Divestitures, Spin-Offs, Split-Offs, and Equity Carve-Outs Ch. 17: Bankruptcy and Liquidation Ch. 2: Regulatory Considerations Ch. 1: Motivations for MA Part III: MA Valuation and Modeling Ch. 3: Takeover Tactics, Defenses, and Corporate Governance Ch. 13: Financing the Deal Ch. 8: Relative Valuation Methodologies Ch. 18: Cross-Border Transactions Ch. 14: Valuing Highly Leveraged Transactions Ch. 10: Private Company Valuation Learning Objectives Primary Learning Objective: To provide students with a knowledge of alternative approaches to valuing leveraged buyouts and the basics of LBO modeling techniques Secondary Learning Objectives: To provide students with a knowledge of Cost of capital approach to valuation; Adjusted present value approach to valuation; The advantages and disadvantages of each valuation approach; and The underpinnings of LBO structuring and valuation models Valuing LBOs A leveraged buyout can be evaluated from the perspective of common equity investors or of all investors and lenders From common equity investors’ perspective, NPV = PVFCFE – IEQ ≥ 0 Where NPV = Net present value PVFCFE = Present value of free cash flows to common