Performance of Valuation Methods in Financial Transactions

1 Cover

2 Title Page Modern Finance, Management Innovation and Economic Growth Set coordinated by Faten Ben Bouheni Volume 4

3 Copyright First published 2021 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc. Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address: ISTE Ltd 27-37 St George’s Road London SW19 4EU UK www.iste.co.uk John Wiley & Sons, Inc 111 River Street Hoboken, NJ 07030 USA www.wiley.com © ISTE Ltd 2021 The rights of David Heller to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. Library of Congress Control Number: 2020951018 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library ISBN 978-1-78630-636-4

4 Introduction

5 1 Traditional Valuation Methods and Ways of Applying Them 1.1. Introduction 1.2. The cost of financial structure 1.3. Valuation measures and follow-up measures 1.4. The perspectives of assessment: control operations 1.5. Conclusion

6 2 The Performance of the Assessment and the Creation of Value from Control Operations 2.1. Introduction 2.2. Theoretical adjustments 2.3. Contextual impacts and adjustments 2.4. The creation of value resulting from control operations 2.5. Conclusion

7 Conclusion

8 Appendix Demonstrating the Terminal Value (TV) of DCFs

9 References

10 Index

11 End User License Agreement

1 Chapter 1 Figure 1.1. Optimal weighted average cost of capital according to the traditiona... Figure 1.2. Modern theory of financial structure Figure 1.3. Adjusted cost of capital Figure 1.4. Summary of valuations by stock market comparisons of shares from Roy...Figure 1.5. Principle of a leverage operation

1 Chapter 1 Table 1.1. Financial aggregates of the companies in the framework (amounts in mi... Table 1.2. Stock market repository of repository companies Table 1.3. Valuation of Royal Dutch Shell by stock market comparisons (amounts i...Table 1.4. Valuation by DCF of Royal Dutch Shell (amounts in millions $) Table 1.5. Determining the weighted average cost of capital of Royal Dutch Shell Table 1.6. Indebted beta of companies in the benchmark Table 1.7. Value of equity of Royal Dutch Shell Table 1.8. Sensitivity analysis of the value of Royal Dutch Shell at the risk-fr...Table 1.9. 2013 balance of Shell and values used to determine its VSB Table 1.10. Determining Shell’s PCV Table 1.11. Determining the economic value of equity of Shell Table 1.12. Consolidated opening and closing balance sheets of the holding compa...Table 1.13. Forecast of activity and operational profitability of the Carrefour ...Table 1.14. Cash flow forecast for the Carrefour SA target Table 1.15. Provisional assessment of the Carrefour SA target Table 1.16. Holding’ s debt schedule Table 1.17. Provisional accounts of the holding company of the Carrefour SA targ...Table 1.18. Determination of the capital amount of the takeover holding company

2 Chapter 2Table 2.1. Percentage difference between the values obtained by the VPA and thos...Table 2.2. Errors (the definition of the error results from the calculation |) b...Table 2.3. Variation in valuation errors depending on the size of risk premiums ...Table 2.4. Error between current values of multiples and predicted values of mul...Table 2.5. Error between current P/E multiple and forecast P/E according to the ...Table 2.6. Error between the current P/E and forecast P/E multiples between youn...Table 2.7. Error between the current value of the multiples and the predicted va...Table 2.8. Error between the current turnover multiple and the forecasted values...Table 2.9. Characteristics of bankruptcy buyout transactions compared to two ben...Table 2.10. Comparing evaluation errors31 on the basis of the CCF method and the...Table 2.11. Low Drofitabilitv of acauisitions accordino to Moeller et al. (2005) Table 2.12. Difference in profitability for buyers with strong and weak governan...

1 Cover

2 Table of Contents

3 Title page

4 Copyright First published 2021 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc. Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address: ISTE Ltd 27-37 St George’s Road London SW19 4EU UK www.iste.co.uk John Wiley & Sons, Inc 111 River Street Hoboken, NJ 07030 USA www.wiley.com © ISTE Ltd 2021 The rights of David Heller to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. Library of Congress Control Number: 2020951018 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library ISBN 978-1-78630-636-4

5 Introduction

6 Begin Reading

7 Conclusion

8 Appendix Demonstrating the Terminal Value (TV) of DCFs

9 References

10 Index

11 End User License Agreement

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