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NEWSLETTER of November 2, 2018

 

The following content has been added at finexpert:


Capital Market Data

We updated the capital market data

(Multiples, Betas and Returns) as to October 15, 2018 >more


Tutorials
QoD15

Question of doubt in corporate valuation QoD#15: Is there anything special about negative Free Cash flows? (advanced) (Bernhard Schwetzler)

This video is the advanced and theoretical discussion of this question. It shows that there is actually a problem; the geometric random walk governing the free cash flow (FCF) development does not directly allow for changes in the sign of the FCF. This makes it difficult to properly model FCF of startup firms. It also causes problems when introducing potential bankruptcy of the firm.
(November 2, 2018). >more


Studies > M & A

ValueTrust

DACH KAPITALMARKTSTUDIE

In this study, ValueTrust provides the newest analyses of cost of capital parameters and multiples for the capital markets of Germany, Austria and Switzerland as of 30 June 2018. The study was compiled in cooperation with finexpert and the Institute of Auditing and Sustainability Accounting at the Johannes Kepler University Linz. >more

Studies > M&A

Ernst & Young

CAPITAL CONFIDENCE BAROMETER: OCTOBER 2018

German and international companies face a balancing act: The pressure to change through new technologies is increasing, but due to political uncertainty and too few suitable candidates, takeover plans at many companies remain in the drawer for the time being. The digital transformation and the blurring of industry boundaries are now causing decision-makers the most headaches: 31 percent of companies worldwide and 32 percent of companies in Germany now describe these and other disruptive forces as the greatest economic risks for their companies in the upcoming months.  >more

Studies > M & A

ZEW - Zentrum für Europäische Wirtschaftsforschung

M&A REPORT - OKTOBER 2018

The M&A Report is compiled jointly by the Centre for European Economic Research (ZEW) and Bureau van Dijk. The M&A Report semi-annually informs about current topics and developments in the field of worldwide mergers and acquisitions drawing on the Zephyr database. Zephyr provides detailed information on more than one million M&A, IPO and Private Equity transactions worldwide. >more

Studies > M & A

Bain & Company

MORE RIGOR MEANS BETTER RESULTS IN CHINA’S GLOBAL PURSUIT

As they make more overseas acquisitions, Chinese companies are learning the critical nuances that contribute to a deal’s success. As Chinese companies become more experienced at outbound M&A, they gain sophistication in critical capabilities, such as developing a clear investment thesis, due diligence and merger integration. >more


Research Papers > Corporate Finance

DOES POLITICAL UNCERTAINTY INCREASE EXTERNAL FINANCING COSTS? MEASURING THE ELECTORAL PREMIUM IN SYNDICATED LENDING

Olivia Kim
2018
This paper examines a contractual lending channel through which political uncertainty matters in a large sample of syndicated loans involving 63 borrower and 35 lender countries between 1990 and 2008. To address the endogenous nature of political uncertainty and simultaneity of credit demand and supply, I use a within-firm estimation approach that exploits differences in lenders’ exposure to national elections around the world as a source of plausibly exogenous time-series variation in political uncertainty. I document that firms pay on average 7 basis points more on loans originated when their lenders are undergoing a national election relative to when their lenders are not undergoing a national election. Consistent with electoral uncertainty driving this premium, the most contested elections have the largest impact (17 bps). Lenders from less financially developed countries are more likely to pass-through political uncertainty costs to borrowers, especially to those from weak creditor rights countries. Overall, political uncertainty leads to a tangible increase in firms’ financing costs. >more

Research Papers > Corporate Finance

FORGIVE BUT NOT FORGET: THE BEHAVIOR OF RELATIONSHIP BANKS WHEN FIRMS ARE IN DISTRESS

Larissa Schäfer
2018
Do relationship banks help firms in distress? Combining a survey-based measure of relationship lending with unique credit registry data, I examine the effect of relationship lending on loan performance. I find that the same firm in the same time period is more likely to become delinquent on a relationship-based loan relative to a transaction-based loan. Higher delinquencies do not, however, result in more defaults or less loan recoveries for relationship banks when loans mature relative to transactional banks. Conditional on past delinquencies, relationship banks are more likely to offer follow-up financing and extract rents. Consistent with theory, relationship banks tolerate temporarily bad results, yet extract rents and secure future business in return. The paper provides new empirical evidence for rent extraction by relationship banks that have been lenient to distressed firms in the past. >more