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FINEXPERT WEBINARS > Financial Modeling | Sanierungsplan | Update Bewertung | DCF | LBO | Merger Modellierung | Valuation 4.0 | Zertifikatslehrgang (HHL) "Financial Modeling, Valuation and M&A"

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FORGING NEW PATHWAYS: THE NEXT EVOLUTION OF INNOVATION IN FINANCIAL SERVICES

NEWS: STUDIES > Performance

World Economic Forum
Emerging technologies such as AI, 5G, DLT, and quantum are increasingly being used by financial services firms and are forming clusters that are driving innovation throughout the sector. These advances can offer new services and savings to both customers and financial institutions. While financial executives largely recognize the promise of emerging technologies, many financial services firms are still struggling to develop comprehensive innovation strategies given the sheer number of technologies maturing in the industry. >more

Certificate Course "Financial Modelling, Valuation and M&A"

Cooperation with HHL and Handelsblatt

finexpert enters into cooperation with HHL Leipzig Graduate School of Management and the Handelsblatt publishing group - certificate course "Financial Modelling, Valuation and M&A". Together with our new cooperation partners we offer the online certificate course "Financial Modelling, Valuation and M&A" starting in September. This course offers a well-founded examination of the various challenges in the context of a corporate transaction, from valuation/pricing to the accounting treatment and financing of the transaction to the structuring of the transaction. The appropriate modeling of the solutions in Excel is also part of the program. >more

UPDATE CAPITAL MARKET DATA

We updated the capital market data (Betas, Multiples, Returns) as to July 15, 2020. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

CROSS-BORDER BUYOUT PRICING

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Nils Janssen, and Bernhard Schwetzler, 2020
Using a dataset of 1,149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples becomes smaller when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs. >more

DAUNTING DEBT DYNAMICS

STUDIES > Macro

Goldman Sachs
Government deficits, debt issuance and debt levels are set to surge as countries race to ease the economic impact of the coronacrisis. This raises many questions: who will finance this debt, will it force a market repricing and/or an eventual growth or inflation problem, and would greater use of negative rates help avoid any of these risks? At the same time, whether corporate bankruptcies could derail the economic recovery is a key concern. In short, how disruptive the recent, dramatic shift in debt dynamics might be is Top of Mind. >more

WHO OWNS THE GERMAN DAX?

STUDIES > Performance

IHS Markit | Deutscher Investor Relations Verband
DIRK - Deutscher Investor Relations Verband (German Investor Relations Association) and IHS Markit (formerly Ipreo), the leading global investor relations (IR) consulting and technology company, have analyzed the structural changes in the investor landscape of the DAX in the joint market study "Investoren der Deutschland AG 7.0" - "Who owns the German DAX? The main focus of the study was both the distribution and, in particular, the changes and cash flows of the institutional free float of DAX issuers in terms of geography, investment style and the most frequently used trading venues. Investments at investor group level, the importance of extra-financial criteria and investor voting behaviour were examined in detail. >more

INVESTING IN A NEW WORLD: CHINA FIXED INCOME

STUDIES > Performance

UBS
In a world where yields are turning negative and bond markets are becoming more volatile, China's onshore fixed income markets are an attractive option for investors. Offering attractive yields, low correlation, safe haven properties and hedging costs so far in 2020, China bonds have a strong investment case. China bonds also offer strategic, long-term exposure to long-term megatrends in China such as the rise of the RMB as a reserve currency, the growth of China's pension industry, and China's rising status as one of the world's largest economies. >more

COVID-19: CRISIS RESILIENCE MADE IN GERMANY

STUDIES > Macro
Deutsche Bank Research
Germany has got COVID-19 under control faster than many other countries. It also recorded one of the lowest infection fatality rates among the G10 countries. The complete fiscal policy U-turn in response to COVID-19 induced economic damage should allow the German economy to weather this crisis better than many other countries – although the impact will still be massive. We have identified six structural features of the German society contributing to its superior collective resilience. >more

EQUITY RISK PREMIUMS: DETERMINANTS, ESTIMATION AND IMPLICATIONS - THE 2020 EDITION

RESEARCH PAPERS > Corporate Valuation

Aswath Damodaran
2020
The equity risk premium is the price of risk in equity markets, and it is a key input in estimating costs of equity and capital in both corporate finance and valuation. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets like the United States, which have long periods of historical data available, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in non-equity markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generated expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis. >more

WHAT IS DIFFERENT ABOUT PRIVATE EQUITY-BACKED ACQUIRERS?

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Heiko Hinrichs, and Denis Schweizer
2020
This paper investigates whether private equity (PE)-backed acquirers have a “parenting advantage” in the mergers & acquisitions (M&A) market. We employ a sample of 788 PE-backed firms and a carefully matched control group of 6,652 non-PE backed peers, for which we observe the entire acquisition history over a 19-year time span. Difference-in-differences estimates suggest that PE backing induces a sizeable but short-lived boost to acquisition activity, whereas type and complexity of these acquisitions are not different. These results are consistent with the idea that PE backing enhances execution and speed in the M&A market. We find that portfolio firms benefit from this acquisition boost through improved valuations and margins on average. The extent to which this holds true, however, depends on the institutional setting of the PE owner. When there is not enough time for learning gains due to an approaching end of the fund lifetime, or when knowledge cannot diffuse due to limited attention of the PE owner, acquisitions may even be detrimental. >more

COVID-19 RECOVERY: BACK TO WORK

STUDIES > Performance

Bain & Company - Recoveries have always mattered in business. Some of the biggest shifts in market share occur coming out of downturns, when new industry leaders — and new industries — often emerge. Rarely, though, has recovery meant putting people’s lives at risk. The post-Covid-19 world will accelerate some existing trends and create new ones, and all business models will have to evolve in order to grow and thrive. But there’s no way to accurately predict the coming year, and it’s a dangerous mistake to rely too heavily on forecasts, which have to be complemented with highly adaptive and resilient business models. >more

PRIVATE EQUITY PANEL Spring 2020

STUDIES > Alternative Investments

CMS Hasche Sigle / FINANCE - For the Private Equity Panel, the FINANCE editorial team, together with the law firm CMS Hasche Sigle, interviews senior investment managers from more than 50 leading private equity houses in Germany three times a year about their current market assessment. The Corona crisis has left deep scars on the German mid-market private equity market, and the leveraged finance and private equity M&A markets have collapsed. But there is also a ray of hope. >more

COVID-19: INDIVIDUELLE AUSWIRKUNGEN AUF DEUTSCHE SCHLÜSSELINDUSTRIEN

STUDIES > Performance

Andersch - This publication reviews consequences of the C-19 pandemic for German key industries. For each sector, it discusses how supply chains and sales are affected as well as interdependencies with other branches and macroeconomic developments. The outcome is a detailed projection of how soon sector recovery is possible contingent on several economic scenarios. >more

UPDATE CAPITAL MARKET DATA

We updated the capital market data (Betas, Multiples, Returns) as to April 15, 2020. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

FINEXPERT COMMUNITY

We welcomed our 2000th member! (March 2020) >more

GERMAN TAKEOVER REPORT 2020

finexpert | ValueTrust
3 Market Overview
11 Capital Market Reaction
15 Statements & Fairness Opinions
21 Success Rates
27 Takeover Case Study: OSRAM Licht AG
30 Transaction Details 2019
The Report covers covers all takeover offers and delisting tender offers of the year 2019 according to the German takeover code WpÜG and provides extensive information on relevant variables like bid types, premia offered, market reaction of target’s and (if available) on bidder’s stock prices. In addition, our extensive database allows to compare last year´s figures of these variables against the moving average of the preceding years and thus to highlight trends and long term developments. Finally, the finexpert German takeover report contains a unique and extensive analysis of fairness opinions and statements of management and supervisory board of the target company (§27 WpÜG), allowing for a detailed analysis of the relationship of these factors upon target stock price reaction and success rates of the takeover bid. Along with the “traditional” success definitions of takeover offers, we analyse an alternative success measure that takes potential bidder toeholds into account. Our results reveal high public M&A activity in 2019 with a large number of offers many of which were unsuccessful. None of the offers’ volume exceeded EUR 5bn, and the takeover offer of EP Global Commerce VI GmbH to the shareholders of Metro AG was the largest (EUR 4.8bn). Most of the bids were launched by foreign investors. This report contains a detailed description of events surrounding the takeover attempts for OSRAM Licht AG from a joint entity of private equity investors: Bain Capital, and Carlyle Group, and later from an Austrian company ams AG. >more

TUTORIALS > Valuation Video QoD23

Questions of doubt in corporate valuation QoD#23: Is there something wrong with unicorn valuation?

Bernhard Schwetzler
This video highlights potential flaws from applying simple post money valuation metrics on growth companies in VC financing rounds: Ignoring special cash flow rights like liquidation preferences yields significant overvaluation.(November 10, 2019). >more (videoarchiv QoD#1-23

RESEARCH PAPERS > Corporate Valuation

SAME, SAME BUT DIFFERENT: HOW PREFERENTIAL CLAIMS SKEW RETURNS OF VENTURE CAPITAL INVESTMENTS

Julian Kaboth, Arnd Lodowicks, Maximilian Schreiter, and Bernhard Schwetzler
2019
Venture capital often involves complex equity contracts, which affect the allocation of cash flows among shareholdings at an exit liquidation. To facilitate economic impact analysis, we structure exit relevant preferential rights by their economic impact in a two-dimensional framework. Based hereon, we provide a model that allows to assess ex-ante value of such shares. We apply our model to a selected sample of ventures and find an average overvaluation on a share class basis of 22.1% (median 23.9%), where overvaluation is particularly severe for common and early-on investments. >more

TOP 3 Studies

COVID-19 and Key Industries
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Research Papers > Corporate Valuation
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Research Papers > Alternative Investments
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>more for Youtube Channel "Questions of Doubt in Corporate Valuation"

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