Re: D&A is different on the I/S and CF, which to use ??
The negative value forces CAGR to be impossible to calculate. See this link for a good explanation and options: http://www.experiglot.com/2008... The negative value forces CAGR to be impossible to calculate. See this link for a good explanation and options:

http://www.experiglot.com/2008/09/15/ca ... -negative/

How to calculate a compound annual growth rate when the beginning value is negative?
The basic answer is that you can’t. Why?
Let’s look at the formula for calculating CAGR:

CAGR = (ending amount / beginning amount)(1 / # of years) – 1

Mathematically, because you’re taking a root of a number, if you have a negative beginning amount and a positive ending amount, you’d be taking the root of a negative number. Unless you have an odd # of years, you can’t compute this mathematically without going into imaginary numbers

Even if you do happen to have (or force) a negative # of years, the result will also be a negative growth rate, which also doesn’t make sense in terms of what’s going on.

The best way to deal with situations where you have a negative initial value is to just footnote it and calculate CAGR based on the first positive initial value you have. So, for example, if you had a project that lost $500 in year 2003, then gained $100 in year 2004, and ended in year 2007 with $500, you might write the following:

Revenues grew from $100 to $500 during the period from 2004-2007 (CAGR of 71%). Note that this excludes the initial 2003 year, when the project lost $500.
Remember, your goal is to present an accurate picture of what’s going on. That almost always means using a few more words to reflect and explain reality rather than just provide a single, calculated figure. Read More

RE: Modifying the Debt Sweep to Target a Debt/Capital Ratio
You can do a quick calcuation in your Cash Flow Statement, as part of CFF to calculate the current Debt / Capital ratio (typically Debt / Debt + Book Equity). Let's say your current ratio is 35% and you want to maintain 40% per our video example. Then you would figure out the amount of extra debt re... You can do a quick calcuation in your Cash Flow Statement, as part of CFF to calculate the current Debt / Capital ratio (typically Debt / Debt + Book Equity). Let's say your current ratio is 35% and you want to maintain 40% per our video example. Then you would figure out the amount of extra debt required to borrow (using simple algebra) and then add a new row in CFF, most likely under your Change in Debt (the one that comes from Debt Sweep). This would automatically increase the cash balance that you have. Keep in mind, if you are already at, say 42%, then don't do additional borrowings, but don't force a paydown since you have no extra money to pay down the debt. Read More

Re: Macro error: compile error in hidden module: thiswork
Hi David, We appreciate your thoroughness in outlining what you've done so far to help us isolate the problem. At this point it likely will require selectively removing certain functions/commands and seeing which one(s) are causing an issue. We've escalated this issue to Level 3 Support and will g... Hi David,

We appreciate your thoroughness in outlining what you've done so far to help us isolate the problem.

At this point it likely will require selectively removing certain functions/commands and seeing which one(s) are causing an issue. We've escalated this issue to Level 3 Support and will get back to you as soon as possible.

Thank you for your continued patience! Read More

RE: Valuation of fair market value of debt converting to equity
You are correct but then you aren't. Normal valuation techniques used in valuation DO NOT apply in distressed examples. So you can throw out CAPM, WACC, etc out the door for restructuring and distressed simply because CAPM and DCF are used for going concerns and highly liquid among all the other gaz... You are correct but then you aren't. Normal valuation techniques used in valuation DO NOT apply in distressed examples. So you can throw out CAPM, WACC, etc out the door for restructuring and distressed simply because CAPM and DCF are used for going concerns and highly liquid among all the other gazillion CAPM assumptions associated with that theory.

Thus your item (2) would be more appropriate. Say you calculate TEV to be $100 (for instance, via EBITDA multiple). Post Chapter 11 emergence, let's say there's zero debt. Then calculate Equity Value ($1,000 or whatever depending on your debt assumption) and then figure out your post Chapter 11 ownership percentage. It's that simple.

As for DCF approach, you need a discount rate - that's your question. If the company is fundamentally viable post-emergence, then the uncertainty is gone, so traditional CAPM, WACC would apply - why not? If problems still abound, then do what private equity firms do - apply a 20% to 30% discount rate because that's the required return distressed investors (similar to private equity/LBOs) require. Read More

Re: att and t-mobile deal
All your questions are addressed in our M&A Deal Structuring course. please go to: www.wstselfstudy.com and click on Courses & Programs. Short Answer to your question: 1) AT&T is going to pay $25B in cash (ca... All your questions are addressed in our M&A Deal Structuring course.
please go to: www.wstselfstudy.com and click on Courses & Programs.

Short Answer to your question:
1) AT&T is going to pay $25B in cash (cash down on their BS) and issue $14B of stock to existing shareholders, DT & public stub (equity up on their BS).
Actual impact to BS will be according to Purchase Price Allocation, covered in our Intermediate Merger Modeling class. Impossible to summarize here.
Beyond Goodwill issues, you have FMV allocation will be extensive due to hard assets.

2) Correct, new stock issuance to existing shareholders. Won't go through public markets. DT doesn't own 100% of T-Mobile, which is also publicly traded. So 8% represents the DT % of T-Mobile on $14B.

3) Take our valuation class. AT&T isn't overpaying. But this will be a disaster. Read More