Mgt 181 Final Exam Guide

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Great move for interested people in finance (M&As): Barbarians at the Gate (really really old) & Limitless! ??? 1. Question on Mr. Acres’ lecture. If you are venture capitalist why you are interested in a company with high growth potential market? - Mr. Acres deals with investment banking, which is the process of assisting individuals, corporations, and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities. May also assist companies involved in mergers and acquisitions, and provide ancillary services. 1. You have to figure out what to sell for. It is an art, and there is no real right answer. a. You can value a company by comparing it to other companies that are similar. i. What did competitors sell for? ii. What are their earnings? b. You can value a company also by looking at its intangibles like things that have unquantifiable qualities. 1. You can calculate the NPV, which = present value minus capital expenditures. 2. The most simplistic is the DCF, how much earnings are worth, discount earnings, and paying for that over time. 3. Even more basic is subtracting liabilities from assets to get equity or the value of a company. - Companies pay to have an evaluation provided. Usually the lowest price is the book value. The DCF is low, and when you get to comparing multiples it gets a little higher. The above are the traditional evaluation approaches. But for companies that are selling, they ask: what am I worth to YOU? 1. Willingness to pay is another evaluation. 2. Walk through all pieces for value for company: a. Earnings b. Think about the value they are getting. c. Put together buyer list: competitors, distributors, buyers… the investment banker comes in and thinks strategically. d. They think about who will make the most amount of money from this company. In terms of technology companies, you really have to think about buyers who have the same product but different market, or same market but different...
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