What is the Price/Earnings to Growth (PEG) Ratio? The PEG ratio is a company’s Price/Earnings ratio divided by its earnings growth rate over a period of time (typically the next 1-3 years). The PEG ratio adjusts the traditional P/E ratio by taking into account the growth rate in earnings per share that are expected in…
Term Sheet Overview A term sheet is a written document the parties exchange containing the important terms and conditions of the deal. The document summarizes the main points of the deal agreements and sorts out the differences before actually executing the legal agreements and starting off with the time-consuming due diligence. The term sheet is…
What is Net Identifiable Assets? Net Identifiable Assets (NIA) consists of the assets acquired from a company whose value can be measured at a given point of time and its future benefit to the company is recognizable. NIA is used for Purchase Price Allocation (PPA) and the calculation of Goodwill in Mergers and Acquisitions (M&A)….
What is Startup Valuation All About? Like any industry, internet companies have unique startup valuation metrics that analysts look at to value companies. In this guide, we will cover the most important e-commerce valuation metrics you should know. To learn more about how to build a financial model to value an e-commerce company, please check out…
What are Trading Mechanisms? Trading mechanisms refer to the logistics behind trading assets and securities, regardless of the type of market. These markets can be exchanges, dealers, or OTC markets. The mechanisms are the operations by which buyers of an asset are matched with sellers. There are two main types of trading mechanisms: Order driven…
What is a Roadshow Presentation? A roadshow presentation takes place over a series of in-person meetings held between the management team of a corporation seeking to raise money and the institutional investors considering the investment opportunity. How does a roadshow work? After the corporate issuer files a preliminary prospectus, underwriters often arrange one or…
What is Multiples Analysis? The multiples analysis is a valuation technique that utilizes different financial metrics from comparable companies to value a target company. Thus, the assumption is that the relative value of certain financial ratios can be used to rank or value a company within a similar group. Despite being the oldest technique in…
What is Terminal Value? Terminal Value (TV) is the estimated present value of a business beyond the explicit forecast period. TV is used in various financial tools such as the Gordon Growth Model, the discounted cash flow, and residual earnings computation. However, it is mostly used in discounted cash flow analyses. What is the Importance…
M&A – Top Considerations and Implications In M&A transactions, there are several important factors that executives, investment bankers, and other stakeholders have to consider, including: Form of consideration (cash vs. shares) Accounting implications Tax treatment Synergies Strategic rationale Intangibles 1. Form of consideration for the M&A deal In order for a company to consider a…
M&A document retention policy After closing an M&A process, the Managing Director responsible for the bank’s participation in the transaction and/or the client relationship should instruct a member of the deal team to assemble the documents to ensure that a complete record of the transaction is created and retained. Each document should be reviewed to…
