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NEWSLETTER of January 11, 2019

 

The following content has been added at finexpert:


Tutorials
QoD19

Question of doubt in corporate valuation QoD#19: Do I really need to care about a "debt policy" in DCF valuation?

Bernhard Schwetzler
Not too many analysts explicitly make an assumption about the firm´s debt policy, especially when using the WACC approach for corporate valuation. This video highlights that also under the WACC approach a debt policy has to be assumed in many cases as it affects the de-/re-levering equations of the beta factor.

(January 8, 2019). >more


Studies > Corporate Finance

The Boston Consulting Group

BCG-AUFSICHTSRATSSTUDIE: AKTIV MITGESTALTEN STATT NUR KONTROLLIEREN

Dynamic changes in industries and markets present supervisory boards with new challenges. What effects do the new framework conditions have on the main tasks and the structure of the Supervisory Board's work? BCG surveyed 120 supervisory boards of large companies in Germany and Austria. The BCG Report shows that supervisory boards not only want to control change, but also actively shape it. New competencies and work processes are needed. >more

Studies > M & A

PwC

DESTINATION DEUTSCHLAND: M&A AKTIVITÄTEN AUSLÄNDISCHER INVESTOREN 2018

The run on German companies continues. What is special about this: The average deal volume rose once again in 2018. The numbers suggest that German companies have benefitted from the problems of other European locations - i.e. the debt crisis in Southern Europe and later the Brexit. But even beyond such effects, German companies are very popular because they are solidly positioned and still fairly valued. >more

Studies > Alternative Investments

Ernst & Young

PRIVATE EQUITY: DER TRANSAKTIONSMARKT IN DEUTSCHLAND H2 2018

The German private equity market cooled down noticeably in 2018, but remains at a high level. After 227 deals in 2017, financial investors only made 216 in the current year. And the deal volume also fell from 19.4 billion euros to 17.9 billion euros. However, the previous year was exceptionally strong: it marked the highest number of deals and the second-highest transaction value since the financial crisis. >more

Studies > Alternative Investments

PwC

REDISCOVERING ALTERNATIVE ASSETS IN CHANGING TIMES

Historically low interest rates and the enduring effect of quantitative easing are making markets expensive, so investors continue to turn to alternative asset classes where alpha looks better. But surplus capital and other factors have forced valuations up and prospective returns down. Changes in how we work and live, prompted by new technology, innovative business models, and geopolitical shifts, could render many real assets obsolete while creating opportunities elsewhere. We also see new entrants disrupting the sector, capturing value and market share.  In this report, PwC examines the fundamentals behind this transformation and the changes across several asset classes. >more


Research Papers > Corporate Finance

DO FIRMS ISSUE MORE EQUITY WHEN MARKETS BECOME MORE LIQUID?

Rogier Hanselaar, René M. Stulz, and Mathijs A. Van Dijk
2017
Using quarterly data on IPOs and SEOs in 38 countries over the period 1995-2014, we show that changes in equity issuance are significantly and positively related to lagged changes in aggregate local market liquidity. This relation is at least as economically significant as the well-known relation between equity issuance and lagged stock returns. It survives the inclusion of proxies for market timing, capital market conditions, growth prospects, asymmetric information, and investor sentiment, as well as the exclusion of the financial crisis. Changes in liquidity are less relevant for firms that face greater financial pressures, firms in less financially developed countries, and during the financial crisis. >more

Research Papers  > Alternative Investments

PUBLIC-TO-PRIVATE BUYOUTS AND INNOVATION

Douglas J. Cumming, Rejo Peter, and Monika Tarsalewska
2018
We study the effect of public-to-private buyout transactions on investments in innovation using an international sample from thirty-six countries over the 1997-2017 period. We use patent counts and citations to proxy for the quantity, quality, and economic importance of innovation. Our results are based on time analysis and matched sample regressions. The data indicate that buyouts are associated with a significant reduction in patents and patent citations, including a reduction of radical (i.e., more scientific) patents. When we split the sample into institutional and management buyouts, the negative effect of buyouts is confirmed only for institutional buyouts, suggesting that highly leveraged transactions prevent target firms from adopting long-term investments. This finding is confirmed by reductions in innovator employment and innovation efficiency subsequent to going private. Moreover, the data indicate that the negative effect is mostly prevalent for transactions where the cost of the deal’s debt financing is higher than the post-buyout cost of the debt. For deals financed only with private equity, this effect is aggravated in the post-2006 period, suggesting that the nature of deals has worsened innovation over time. We rule out alternative explanations for these findings, including but not limited to outliers, truncation bias, and endogeneity. >more