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Control Premium
A control premium is an amount that a buyer is sometimes willing to pay over the current market price of a publicly traded company in order to acquire a controlling share in that company. If the market perceives that a public company's profit and cash flow is not being maximized, capital structure is not optimal, or other factors that can be changed are impacting the company's share price, an acquirer may be willing to offer a premium over the price currently established by other market participants. A discount for lack of control, sometimes referred to as a minority discount, reflects the reduction in value from a firm's perceived optimal or intrinsic value when cash flow or other factors prevent optimal value from being reached. Overview of concept Transactions involving small blocks of shares in public companies occur regularly and serve to establish the market price per share of company stock. Acquiring a controlling number of shares sometimes requires offering a premium over t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Minority Discount
Minority discount is an economic concept reflecting the notion that a partial ownership interest may be worth less than its proportional share of the total business. The concept applies to equities with voting power because the size of voting position provides additional benefits or drawbacks. For example, ownership of a 51% share in the business is usually worth more than 51% of its equity value—this phenomenon is called the premium for control. Conversely, ownership of a 30% share in the business may be worth less than 30% of its equity value. This is so because this minority ownership limits the scope of control over critical aspects of the business. Share prices of public companies usually reflect the minority discount. This is why take-private transactions involve a substantial premium over recently quoted prices. Properties of minority interest On a per-share basis, buyers will pay less for minority interest versus a controlling or majority interest because a minority posi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
NYU Journal Of Law & Business
The ''New York University Journal of Law & Business'' is a student-edited law review at New York University School of Law published three times each academic year. It was established in 2004 and is available online. The journal covers a wide range of business law topics, including bankruptcy and restructuring; capital markets and securities; corporate law and governance; foreign and international business law; hedge funds and private equity; and tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n .... Membership Each year, the journal selects approximately 50 new members through a writing competition that takes place after the conclusion of the first year of law school. Symposia The journal hosts a conference each Fall semester and a symposium each Spring semester. References ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Synergy
Corporate synergy refers to a financial benefit that a corporation expects to realize when it merges with or acquires another corporation. Corporate synergy occurs when corporations interact congruently with one another, creating additional value. Synergies are divided into two groups: operational (revenue enhancement and cost reduction) and financial (decrease in cost of capital, tax benefits). Seeking for synergies is a nearly ubiquitous feature and motivation of corporate mergers and acquisitions and is an important negotiating point between the buyer and seller that impacts the final price both parties agree to. The synergy value should not be confused with the control premium; these metrics should be calculated separately. Positive synergies arise when the combined corporation will bring about better results than the two independent corporations, as in the saying "the whole is better than the sum of the parts". If the corporations do not do due diligence, negative synergies m ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Shareholders' Protection
Shareholders' protection is a contingency process detailing what will happen to a shareholder's shares if the shareholder dies or becomes seriously ill. In the interests of financial security, business stability, and continuity – particularly for private limited companies A private limited company is any type of business entity in "private" ownership used in many jurisdictions, in contrast to a publicly listed company, with some differences from country to country. Examples include the ''LLC'' in the United Sta ... where there may only be a small number of principal shareholders – it is essential to provide a safety net following the loss of a shareholder: * Shares may go to the deceased’s family, which has no interest in the business and would prefer a cash sum * The company or other shareholders will want to retain control by buying lost shares – but may not have the resources to do so * The shares may be taken over by someone who does not share the company’s obj ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
EBITDA
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, pronounced , , or ) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base. It is derived by subtracting from revenues all costs of the operating business (e.g. wages, costs of raw materials, services ...) but not decline in asset value, cost of borrowing, lease expenses, and obligations to governments. Though often shown on an income statement, it is not considered part of the Generally Accepted Accounting Principles (GAAP) by the SEC and the SEC hence requires that companies registering securities with it (and when filing its periodic reports) reconcile EBITDA to net income. Usage and criticism EBITDA is widely used when assessing the performance of a company. EBITDA is useful to assess the underlying profitability of the operating businesses ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Enterprise Value
Enterprise value (EV), total enterprise value (TEV), or firm value (FV) is an economic measure reflecting the market value of a business (i.e. as distinct from market price). It is a sum of claims by all claimants: creditors (secured and unsecured) and shareholders (preferred and common). Enterprise value is one of the fundamental metrics used in business valuation, financial analysis, accounting, portfolio analysis, and risk analysis. Enterprise value is more comprehensive than market capitalization, which only reflects common equity. Importantly, EV reflects the opportunistic nature of business and may change substantially over time because of both external and internal conditions. Therefore, financial analysts often use a comfortable range of EV in their calculations. EV equation For detailed information on the valuation process see Valuation (finance). : Enterprise value = :: common equity at market value (this line item is also known as "market cap") :: + debt at market v ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Business Valuation
Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Here various valuation techniques are used by financial market participants to determine the price they are willing to pay or receive to effect a sale of the business. In addition to estimating the selling price of a business, the same valuation tools are often used by business appraisers to resolve disputes related to estate and gift taxation, divorce litigation, allocate business purchase price among business assets, establish a formula for estimating the value of partners' ownership interest for buy-sell agreements, and many other business and legal purposes such as in shareholders deadlock, divorce litigation and estate contest. Specialized business valuation credentials include the Chartered Business Valuator (CBV) offered by the CBV Institute, ASA and CEIV from the American Society of Appraisers, and the CVA by the National Association of Certi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Divestment
In finance and economics, divestment or divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment. Divestiture is an adaptive change and adjustment of a company's ownership and business portfolio made to confront with internal and external changes. Motives Firms may have several motives for divestitures: # a firm may divest (sell) businesses that are not part of its core operations so that it can focus on what it does best. For example, Eastman Kodak, Ford Motor Company, Future Group and many other firms have sold various businesses that were not closely related to their core businesses. # to obtain funds. Divestitures generate funds for the firm because it is selling one of its businesses in exchange for cash. For example, CSX Corporation made divestitures to focus on its core railroad business and also to obtain funds so that it could pay off so ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Equity Value
Equity value is the value of a company available to owners or shareholders. It is the enterprise value plus all cash and cash equivalents, short and long-term investments, and less all short-term debt, long-term debt and minority interests. Equity value accounts for all the ownership interest in a firm including the value of unexercised stock options and securities convertible to equity. From a mergers and acquisitions to an academic perspective, equity value differs from market capitalization or market value in that it incorporates all equity interests in a firm whereas market capitalization or market value only reflects those common shares currently outstanding. Calculating Equity Value Equity value can be calculated in two ways, either the intrinsic value method, or the fair market value method. The intrinsic value method is calculated as follows: Equity Value = Market capitalization + Amount that in-the-money stock options are in the money + Value of equity issued from ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Goodwill (accounting)
In accounting, goodwill is an intangible asset recognized when ownership of a firm is transferred as a going concern. It represents the value of a firm's intrinsic ability to retain customer business, where that value is not otherwise attributable to brand name recognition, contractual arrangements or other specific factors. Goodwill is recognized only through an acquisition; it cannot be self-created. It is the excess of the "purchase consideration" (the money paid to purchase the asset or business) over the net value of the assets minus liabilities. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched. Under US GAAP and IFRS, goodwill is never amortized, because it is considered to have an indefinite useful life. (Though private companies in the United States may elect to amortize goodwill over a period of ten years or less under an accounting alternative from the Private Company Council of the FASB.) Instead, management is ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company. Management of the target company may or may not agree with a proposed takeover, and this has resulted in the following takeover classifications: friendly, hostile, reverse or back-flip. Financing a takeover often involves loans or bond issues which may include junk bonds as well as a simple cash offers. It can also include shares in the new company. Types Friendly A ''friendly takeover'' is an acquisition which is approved by the management of the target company. Before a bidder makes an offer for another company, it usually first informs the company's board of directors. In an ideal world, if the board feels that accepting the offer serves the shareholders better than rejecting it, it recomm ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |