Forum Search: technical analysis
FCFF calculation & WACC
Hi Guys, I have a few questions that i would like your opinion on. 1. On the DCF Analysis we calculate NOPAT after we subtract from EBIT the Cash Taxes (i.e NOPAT=EBITx(1-Tax rate)). Now let's assume that the company has retained losses carried forwmard which will not turn positive for the 5... Read More
Hi Guys, I have a few questions that i would like your opinion on. 1. On the DCF Analysis we calculate NOPAT after we subtract from EBIT the Cash Taxes (i.e NOPAT=EBITx(1-Tax rate)). Now let's assume that the company has retained losses carried forwmard which will not turn positive for the 5... Read More
Quick & Dirty Basic LBO Model: About the LBO model
Hi there, In relation to this class, I have a couple of doubts that you may be able to help me with: (1). If we had dividends during the investment period, would we include them when calculating the Multiple of Capital (in that case being [Dividends + Exit Equity Value] / [Equity Injected] )? ... Read More
Hi there, In relation to this class, I have a couple of doubts that you may be able to help me with: (1). If we had dividends during the investment period, would we include them when calculating the Multiple of Capital (in that case being [Dividends + Exit Equity Value] / [Equity Injected] )? ... Read More
RE: Quick & Dirty Basic LBO Model: About the LBO model
1) Yes, if you had dividends in the investment period, you would include in Multiple of Capital as well as triangulate cash flows for IRR. Please refer to our Complex LBO Modeling class where this is covered. 2) Correct, however, since we are not calculating Goodwill here, you need to incorporat... Read More
1) Yes, if you had dividends in the investment period, you would include in Multiple of Capital as well as triangulate cash flows for IRR. Please refer to our Complex LBO Modeling class where this is covered. 2) Correct, however, since we are not calculating Goodwill here, you need to incorporat... Read More
CAPM alpha risk
Generally speaking, don't get caught up in the hype about the "quest for alpha". CAPM (which we recognize is a THEORY still) estimates the required return from an equity (or security). A stock's deviation from CAPM is referred to as alpha (excess returns) and as such, should not be incorporated into... Read More
Generally speaking, don't get caught up in the hype about the "quest for alpha". CAPM (which we recognize is a THEORY still) estimates the required return from an equity (or security). A stock's deviation from CAPM is referred to as alpha (excess returns) and as such, should not be incorporated into... Read More
Merger Modeling Basics: Synergies and Cash PE question
As this is a quick and dirty analysis, goodwill amortization (usually zero) and any tax deducts (i.e. 338(h)(10) elections) are based on purchase price of equity and as such are not included in this short analysis. Don't think too much into this analysis - the concepts are discussed in the M&A D... Read More
As this is a quick and dirty analysis, goodwill amortization (usually zero) and any tax deducts (i.e. 338(h)(10) elections) are based on purchase price of equity and as such are not included in this short analysis. Don't think too much into this analysis - the concepts are discussed in the M&A D... Read More
Corporate Valuation: Nuances on these methodologies
Hi there, I have a couple of doubts in relation to this module: (1). Could you please explain in more detail why capital leases are excluded (I watched that part twice and didn't really get it)? If we had a leasing finance (a credit line w/ a commercial bank) would we include it in the EV calc... Read More
Hi there, I have a couple of doubts in relation to this module: (1). Could you please explain in more detail why capital leases are excluded (I watched that part twice and didn't really get it)? If we had a leasing finance (a credit line w/ a commercial bank) would we include it in the EV calc... Read More
RE: Tax expense for terminal year
Yes, you should because the NOL will run out. Please see our other posts in this forum for different ways to treat NOL value in DCF analysis.
Yes, you should because the NOL will run out. Please see our other posts in this forum for different ways to treat NOL value in DCF analysis.
Deal Comps Analysis: Quick model formatting question
Hi, This might seem like a dumb question, but does it really matter how we structure our models? Because the deal comps inputs doesn't have the "adjust EBIT" etc but the public comps do. Also, I feel a bit uneasy about hardcoding all these "adjustments": in the real working world, shouldn't we ri... Read More
Hi, This might seem like a dumb question, but does it really matter how we structure our models? Because the deal comps inputs doesn't have the "adjust EBIT" etc but the public comps do. Also, I feel a bit uneasy about hardcoding all these "adjustments": in the real working world, shouldn't we ri... Read More
RE: Deal Comps Analysis: Quick model formatting question
At the end of the day, it doesn't matter. In the Deal Comps, many firms do not input forward projections and such, a different template is used. You can most certainly use our Trading Comps template for Deal Comps. To answer your question about best practices, you are correct, be as clear as p... Read More
At the end of the day, it doesn't matter. In the Deal Comps, many firms do not input forward projections and such, a different template is used. You can most certainly use our Trading Comps template for Deal Comps. To answer your question about best practices, you are correct, be as clear as p... Read More
It looks like you are a prime candidate for our Complex LBO and Super-Advanced Merger Modeling! As explained in the videos, your questions relate to our simple merger model which is meant to give a taste and a proxy of the all-out merger model. To answer your question: 1) Accretion/Dilution is a... It looks like you are a prime candidate for our Complex LBO and Super-Advanced Merger Modeling! As explained in the videos, your questions relate to our simple merger model which is meant to give a taste and a proxy of the all-out merger model. To answer your question:
1) Accretion/Dilution is an even more back-of-the-envelope analysis and as such, transaction costs are not considered. In our videos, we clearly caveat that. In reality, the calculation is much more complex with FMV step-up (tangible assets) and Intangible allocations and DTL (deferred tax liability) creations, etc.
2) Target's Book Value in Purchase Accounting is outright deleted as the company no longer exists. The funding of the deal is irrespective of the treatment of the old company. This is covered extensive in our Super-Advanced Merger Modeling course which we will have to defer you to.
3) Again, the simple merger model is just that - a simple merger model. Typically the Transaction Equity Value would be funded with cash/stock and the existing debt refinanced or rolled over. In our video example, our point was to demonstrate that it could be that method or you could refinance some of the debt with equity (again, usually unlikely) but in the more robust merger model, we cover Sources & Uses very deeply.
4) How you pay the target shareholders and how you fund the transaction in the capital markets are the same thing. You raise debt to pay the target s/h in cash and you issue stock directly to the s/h.
5) Correct, see our comments above about this being a "simple" merger model that goes through how to calculate a more robust accretion/dilution figure but without the deeper deal structuring. That is covered in our Super-Advanced Merger Modeling course.
Thank you. Read More