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Nowadays, the transmission of companies market is rapidly expanding. Given this development of the market, the company BestValue was created to be an intermediary between seller and buyers. This project thesis focuses on this phenomenon and particularly to the position of the purchaser of a company. In order to transfer a company, BestValue needs to follow different steps. Valorization is one of the most important steps and leads to the value of the target company. One of the challenges is to make the acquirer understand the meaning of this valorization process. Therefore, the thesis will help the purchaser to see where he can create value with the target company. Some interviews realized during the project will help to understand the motivation that leads a buyer to buy someone’s business instead of creating his own. Moreover, it helps to value the target company in the position of the acquirer. To do so, this thesis starts with some theoretical aspects : an overview of the different methods of valorization, the different types of acquirer and what is transmitted in a company transaction. After the theoretical part, this thesis addresses more practical aspects, with the presentation of cases. Indeed, it will describe where the value is created when someone buys a company, and how the acquirer can optimize his purchase. The first output of this work is the creation of a new tool which will help BestValue to demonstrate how the acquirer can create value with a targeted company. Moreover, thanks to the Leverage Buy-Out method, the understanding of the financial aspects of the purchase is the second output of this work.
Adjusted present value --- Discounted cash-flow --- holding --- leverage buy-out --- memorandum --- net present value --- tax shields --- transmission --- valorization --- weighted average cost of capital --- Sciences économiques & de gestion > Finance
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ESG reporting has become increasingly important for firms, investors, governments, and stakeholders due to heightened awareness of environmental and social issues, and investor demand for sustainable investments. While producing beneficial effects, ESG reporting has also presented challenges, primarily due to the lack of harmony in voluntary ESG disclosures, making it difficult for stakeholders to compare and assess corporate sustainability efforts effectively. Therefore, efforts around the world have been made by governments and other relevant organizations to regulate reporting, creating mandatory ESG reporting regulations. Scholars have investigated whether mandatory ESG reporting regulations are beneficial or detrimental to firms. Benefits include reductions in greenwashing, improved risk management, and better stock liquidity. However, some studies have found adverse market reactions, making the impact of mandatory ESG reporting unclear. Firms may benefit from reduced information asymmetry, reputation effects, and a decrease in the risk of shareholder expropriation. On the other hand, mandatory ESG disclosure involves compliance costs that might impact profitability. Additionally, proprietary and political costs pose significant challenges to its effectiveness. Attention in the literature has also been given to country and market-specific factors when examining the impact of mandatory ESG reporting. Differences are expected across legal regimes, namely common law and civil law. In common law countries, mandatory ESG reporting is expected to decrease the cost of equity due to prior lower levels of stakeholder protection and weaker information environments. Conversely, in civil law countries, it is anticipated to increase the cost of equity due to higher existing ESG performance levels, which may result in exposing "bad players" and greater compliance costs, thereby leading to negative market reactions. This thesis tests the impact of mandatory ESG reporting on the cost of equity capital for firms, using a staggered difference-in-difference methodology to analyse data from 10 countries from 1998 to 2018. The main results indicate an average increase in the cost of equity following the introduction of mandatory ESG reporting, with comparative analysis revealing a decrease in common law countries and an increase in civil law countries. The conclusions emphasize the importance of considering legal and country-specific contexts when assessing the effects of ESG reporting on financial performance.
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This paper offers an assessment of the methodologies employed to estimate the economic opportunity cost of capital for public sector projects, relying on the Mexican case for an applied empirical exercise. The traditional weighted cost of capital (top-down) approach used in the estimation of Mexico's economic opportunity cost of capital is reviewed and compared to the supply price (bottom-up) approach. With respect to previous studies using the top-down approach, this paper explores the contribution of domestic savings and expands the analysis to include a more detailed examination of the available macroeconomic, labor, financial, and tax information. The re-estimated top-down economic opportunity cost of capital for Mexico comes to 10.4 percent. To confirm these results and provide additional insights regarding the alternative bottom-up approach, the economic opportunity cost of capital is estimated using the supply price plus externalities method. For the case of Mexico, this paper recommends using a combination of estimation models (both the top-down and bottom-up approaches) to check the consistency of results and re-estimating the economic opportunity cost of capital every five years to accommodate for macroeconomic and fiscal changes. More broadly, the paper acknowledges the complexities involved in the estimation of the economic opportunity cost of capital for public investment projects and underlines the relevance of additional considerations, such as changes in global economic trends and country risk ratings, tax distortions, financial sector improvements, the impact of reforms, and data availability.
Banks and Banking Reform --- Debt Markets --- Economic Opportunity Cost of Capital (EOCK) --- Economic Theory & Research --- Emerging Markets --- Finance and Financial Sector Development --- Investment & Investment Climate --- Macroeconomics and Economic Growth --- Private Sector Development --- Public Investment Projects --- Social Discount Rate --- Supply Price Approach --- Tax Externalities --- Weighted Cost of Capital
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Index theory (Mathematics) --- Aggregation. --- CPI. --- Cobb-Douglas index. --- Consumer price index. --- Generalised mean. --- Geometric Young index. --- Hedonic price index. --- Lowe index. --- Price. --- Production theory. --- bias. --- cost-of-living index. --- index theory. --- inflation. --- measurement. --- unit values. --- user cost of capital.
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This text is designed for use in a course in applied international corporate finance for managers and executives. Instead of the "encyclopedic" approach, the text focuses on the two main issues of interest to managers who deal with overseas operations. The first main issue is how uncertain foreign exchange (FX) rate changes affect a firm's ongoing cash flows and equity value, and what can be done about this risk. The second main issue is the estimation of the cost of capital for international operations and the evaluation of overseas investment proposals. Numerous examples of real-world companies are used.
International finance. --- Foreign exchange. --- Capital budget. --- FX exposure --- operational hedging --- FX translation exposure --- foreign currency debt --- hedge accounting --- currency swaps --- cost of capital --- hurdle rate --- political risk --- international capital budgeting
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The Paris Agreement, an international treaty on climate change, was adopted by 196 states and started a legislative and economic race to limit global warming. Based on this, the EU presented the EU Green Deal in 2019 as the overarching legal framework aiming for the global objective of the Paris Agreement. As part of the EU Green Deal, the EU intends to decouple economic growth from resource use and ensure no net emissions of greenhouse gases by 2050. I investigated whether the environmental performance in the European utility industry is a corporate financial cost or benefit. Altogether, I found both positive and negative linear correlations between corporate carbon emissions and the cost of capital in the European utility industry in the period between 2015 and 2022. On the one hand, an inverse linear correlation is explainable by conservative investors' belief that increased carbon emissions as an indicator signals increased production and economic growth. On the other hand, a positive linear correlation is explainable by the existence of a carbon (-transition) risk.
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This open access book discusses firm valuation, which is of interest to economists, particularly those working in finance. Firm valuation comes down to the calculation of the discounted cash flow, often only referred to by its abbreviation, DCF. There are, however, different coexistent versions, which seem to compete against each other, such as entity approaches and equity approaches. Acronyms are often used, such as APV (adjusted present value) or WACC (weighted average cost of capital), two concepts classified as entity approaches. This book explains why there are several procedures and whether they lead to the same result. It also examines the economic differences between the methods and indicates the various purposes they serve. Further it describes the limits of the procedures and the situations they are best applied to. The problems this book addresses are relevant to theoreticians and practitioners alike.
Macroeconomics. --- Investment banking. --- Securities. --- Business mathematics. --- Macroeconomics/Monetary Economics//Financial Economics. --- Investments and Securities. --- Business Mathematics. --- Arithmetic, Commercial --- Business --- Business arithmetic --- Business math --- Commercial arithmetic --- Finance --- Mathematics --- Blue sky laws --- Capitalization (Finance) --- Investment securities --- Portfolio --- Scrip --- Securities --- Securities law --- Underwriting --- Investments --- Investment banking --- Banks and banking, Investment --- Investment banks --- Financial institutions --- Economics --- Law and legislation --- Firm valuation --- Cost of capital --- Weighted average cost of capital --- Insolvency and valuation --- Adjusted present value --- Accounting --- Taxation --- Audit --- Discounted cash flow --- Cash flows --- Asset pricing --- Equity and debt --- Flow to equity --- Total cash flow --- Financing --- Investment --- Leverage --- investments and securities
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The private sector and public authorities both need access to capital for investment, job creation and growth. For a number of reasons, explained in this book, Southern Africa suffers from disproportionately expensive capital and this is denying the region its full growth potential. This is a serious situation within the region, where public expectations of economic growth are being frustrated in South Africa, and in sub-Saharan Africa generally which relies on Southern Africa as both a source and a destination for investment. This book reflects the ideas and proposals of a group of experts and practitioners from the state and business environments, brought together by the Development Centre with public and private sector partners on reducing the cost of capital in the region. It provides insight into the nature of the problem of the cost of capital in Southern Africa and the effects it has on business activity and infrastructure development. In addition, the authors set out to define strategies for reducing capital cost, outlining measures suitable for government and private actors.--Publisher summary.
Capital costs -- Africa, Southern. --- Capital costs -- Developing countries. --- Capital costs --- Financial Management & Planning --- Finance --- Business & Economics --- Cost of capital --- Cost of debt --- Cost of equity --- Cost --- South Africa --- Debt relief --- Economics --- Coût du capital --- Dettes --- Economie politique --- Allègement --- Africa, Southern --- Afrique australe --- Economic conditions --- Conditions économiques
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New methodology for econometricians, based on the dual formulation of the theory of production in terms of prices. The objectives of econometric modeling of producer behavior are to determine the nature of substitution among inputs and outputs and of differences in technology, as well as the role of economies of scale in production. Recent advances in methodology, based on the dual formulation of the theory of production in terms of prices, have enabled econometricians to achieve these objectives more effectively. This volume summarizes the economic theory, the econometric methodology, and the empirical findings resulting from the new approach.
Production (Economic theory) --- Econometric models. --- ECONOMICS/Mathematical & Quantitative Methods --- Microeconomics --- Supply and demand --- Demand (Economic theory) --- Supply-side economics --- Capital costs --- Econometric models --- Jorgenson, Dale W. --- Cost of capital --- Cost of debt --- Cost of equity --- Cost --- Jorgenson, D. W. --- Jorgenson, Dale Weldeau, --- 喬根遜,
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The essays in this volume provide a comprehensive view of applications of the cost of capital.The essays in this volume provide a comprehensive view of applications of the cost of capital. The cost of capital is the key concept in the analysis of taxation of business income. It is also critical to the formulation of a new system of national accounts, where it plays the role of the price of capital services. Empirical measurements of productivity and economic welfare generated by these accounts underlie recent innovations in the econometric modeling of consumer and producer behavior.
Capital costs --- Production (Economic theory) --- Capital --- Econometric models. --- Jorgenson, Dale W. --- ECONOMICS/General --- Cost of capital --- Cost of debt --- Cost of equity --- Cost --- Capital assets --- Fixed assets --- Economics --- Capitalism --- Infrastructure (Economics) --- Wealth --- Microeconomics --- Supply and demand --- Demand (Economic theory) --- Supply-side economics --- Jorgenson, D. W. --- Jorgenson, Dale Weldeau, --- 喬根遜, --- Econometric models
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