The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernov is a history of the modern banking system in the US from 1838 to 1989 told through the history of the J.P Morgan bank. The book chronicles the bank beginning in the baronial age which ended with the death of J. Pierpont Morgan in 1913‚ the diplomatic age from 1913 to 1948‚ and the post war casino age from 1948 to 1989‚ when the book was written. There were three significant events that shaped the future
Premium Bank Federal Reserve System Central bank
CASE QUESTIONS Cash Flows and Value. Cost of Capital Case 1: Hop-In Food Stores‚ Inc. 1. Determine the correct price for this particular IPO. Use several methods to do this and compare them. 2. What extra information would you try to acquire in a real life situation? Case 2: Chem-Cal Corporation 1. How do you calculate the WACC for this firm? 2. What is the cost of capital of the debt‚ preferred stock‚ and common stock (assume the equity beta is 1.22)? 3. Calculate the WACC. How can a WACC be used
Premium Weighted average cost of capital Corporate finance Finance
PitchBook 4Q 2012 Private Equity Sponsored by Breakdown Bet ter Data. Bet ter Decisions. PitchBook 4 Table of Contents Intro Letter ............................................................................. 1 Private Equity Deal Flow ........................................................... 2 Investments by Deal Size .......................................................... 3 Private Equity Add-on Activity ...................................................4 Investments
Premium Private equity
unrated or rated below investment grade by the credit rating agencies Typically yield about 1-2 percentage points below yields on U.S. Treasury debt of comparable maturities. Junk bonds are commonly used source of “permanent” financing in LBO transactions During recessions‚ junk bond default rates often exceed 10% None of the
Premium Bond Debt Loan
Kinder Morgan - MBO Richard Kinder and Bill Morgan purchased a master limited partnership pipeline company from Enron for $40 million in 1997‚ founding Kinder Morgan‚ Inc. (KMI) 1. The primary benefit of an MLP comes in the form of tax savings. While shareholders in a corporation face double taxation‚ owners of a partnership are taxed only once (when receiving distributions). Corporate income tax does not exist in the partnership. When cash distributions to MLP owners exceed
Premium Types of business entity Limited partnership Stock
arising new entity. Private equity is split up into Venture Capital and Leveraged Buyout funds‚ with a little made up of mezzanine funds. LBO companies buy publicly traded companies that are experiencing inefficiencies from costly regulation of being publicly traded and the incentives of managers and shareholders. The growing overlap is correlated between the LBO side of private equity and the more recent trend in hedge funds of acquiring large stakes in mature‚ failing companies in order to have
Premium Hedge fund Private equity Mutual fund
arrive at a value of equity. The analysis above suffers from the fact that it is a highly levered transaction using a constant WACC discount rate‚ when in fact the leverage is changing rapidly. One solution is to use APV. Another is to use the LBO technique‚ which is what I want you to do in this case‚ using the following: -Ignore non operating assets initially -Assume same debt as case above but that debt is paid down with any positive cash flow each year. Don’t forget to adjust
Premium Generally Accepted Accounting Principles Investment Cash flow
Rich get Richer and Poor get Poorer In today’s world people want to be healthy‚ happy and well educated and most want to own some type of capital. They also want to be well paid for the work that they do and they prefer to pay as little tax as possible. While everybody is happier when the rate of inflation is low and when the economy is growing and everyone is getting better off. In booming economic times‚ such as we recently have enjoyed‚ the only problem is that "the rich get richer and the poor
Premium Poverty Household income in the United States Economic inequality
want to raise capital by Leveraged Buyout (LBO) approach. This means ACC will finance money though equity and debt to buy AirThread and pay the debt by the cash flows or assets of AirThread. * In another word‚ it’s a highly levered transaction using a fixed WACC discount rate; however the leverage is changing in fact. * If we want to use WACC method‚ one assumption must be met: this program will not change the debt-equity ratio of AirThread. Under LBO approach‚ it’s impossible. * So we
Premium Net present value Rate of return Investment
Why do most mergers and acquisitions (M&A) fail to create value for the acquirer ’s shareholders? What are the main reasons in your opinion? Identify the difference between a good company and a good investment Most of publicly traded companies’ mergers destroy value for buy-side shareholders and at the same time sellers are compensated with premiums1. The same opinion is stated in one of the most quoted book about valuation and creating value: most of M&A deals don’t create value for buyers2
Premium Stock market Mergers and acquisitions Stock