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…
What is Discounted Cash Flow DCF analysis? Discounted cash flow DCF analysis determines the present value of a company or asset based on the value of money it can make in the future. The assumption is that the company or asset is expected to generate cash flows in this time frame. In other words, the…
What is a Free Cash Flow? Free cash flow (FCF) measures a company’s financial performance. It shows the cash that a company can produce after deducting the purchase of assets such as property, equipment, and other major investments from its operating cash flow. In other words, FCF measures a company’s ability to produce what investors…
What are Proforma Earnings per Share (EPS)? Proforma earnings per share (EPS) is the calculation of EPS assuming a merger and acquisition (M&A) takes place and all financial metrics, as well as the number of shares outstanding, are updated to reflect the transaction. “Pro forma” in Latin means “for the sake of form.” In this…
What is a Type A Reorganization? Type A reorganization is a “statutory merger or consolidation.” These are mergers or consolidations effected pursuant to state corporate law. A merger is a union of two or more corporations. One corporation retains its existence and absorbs the others. On the other hand, a consolidation occurs when a new corporation…
What is a Tax-Free Reorganization? A corporation may undergo restructuring or reorganization for various strategic reasons, such as increasing operational efficiency or reducing costs. The reorganization may be conducted to increase profits. A tax-free reorganization is often implemented to identify efficiencies within the law that allow for reduced tax liability. Such types of reorganizations can…
