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What Is Optimal Capital Structure?

Andrew Stolz

Definition of Optimal Capital Structure. The optimal capital structure of a firm is the right combination of equity and debt financing. It allows the firm to have a minimum cost of capital while having the maximum market value.

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M&A Deal Terms: Average Capital Structure

Exit Strategy

The following chart from GF Data shows the average capital structure over the past 5 years for middle market business acquisitions. The post M&A Deal Terms: Average Capital Structure appeared first on Exit Strategies Group, Inc.

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Considerations for Dual-Class Companies Contemplating M&A Transactions

Harvard Corporate Governance

The rise of founder-led, venture capital-backed companies in recent years has coincided with a surge of companies implementing dual-class share structures in connection with their initial public offerings. There are compelling rationales for adopting a dual-class structure, but even proponents of the structure generally acknowledge that these benefits are significantly mitigated once the dual-class shares are out of the hands of the founders and/or pre-IPO stockholders.

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VICI Properties: Creating Value from the Ashes of Caesar’s Demise

Harvard Corporate Governance

Academic Research Bankruptcy & Financial Distress Comparative Corporate Governance & Regulation Institutional Investors Bankruptcy Capital formation Capital structure Distressed companies Hedge funds IPOs REITsPosted by William Ferguson (Ferguson Partners), David F.

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The Single-Owner Standard and the Public-Private Choice

Harvard Corporate Governance

Academic Research Comparative Corporate Governance & Regulation Mergers & Acquisitions Securities Litigation & Enforcement Capital structure Delaware articles Delaware law Fairness review Fiduciary duties Merger litigation Mergers & acquisitions Ownership Property rights

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The Quality of Earnings Information in Dual-Class Firms

Harvard Corporate Governance

Related research from the Program on Corporate Governance includes The Untenable Case for Perpetual Dual-Class Stock (discussed on the Forum here ); The Perils of Small-Minority Controllers (discussed on the Forum here ); and Keynote Presentation on The Lifecycle Theory of Dual-Class Structures (discussed on the Forum here ), all by Lucian Bebchuk, and Kobi Kastiel.

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Southwest Airlines Meltdown and Your Investment Decision

Auto Dealer Valuation Insights

Capital Structure Family Business Director Planning & StrategyAs the calendar turns to 2023, I pray you aren’t reading this stuck in an airport waiting for lost luggage.

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Barber and Lange Promotions Announced

Auto Dealer Valuation Insights

Mercer Capital is pleased to announce that Zachary M. Zac Barber is a member of the firm’s Financial Reporting Valuation Group and has experience providing valuation analyses related to intangible assets, contractual agreements, and complex capital structures.

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Investment Stewardship Global Principles 2023

Harvard Corporate Governance

Companies are responsible for ensuring they have appropriate governance structures to serve the interests of shareholders and other key stakeholders. Companies and their boards should be accountable to shareholders and structured with appropriate checks and balances to ensure that they operate in shareholders’ best interests to create sustainable value. Posted by Sandy Boss, John McKinley and Michelle Edkins, BlackRock, Inc.,

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Mineral Aggregator Valuation Multiples Study Released

Auto Dealer Valuation Insights

Mercer Capital has its finger on the pulse of the minerals market. Due to a variety of corporate structures (including master limited partnerships and Up-Cs) and complex capital structures (including preferred equity and non-traded.

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Family Business Director’s Reading Roundup

Auto Dealer Valuation Insights

Here at Family Business Director, we are focused on the numbers of family business: measuring and assessing financial performance, establishing dividend policy, setting capital structure, making capital budgeting decisions, and structuring shareholder redemptions.

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Mineral Aggregator Valuation Multiples Study Released

Auto Dealer Valuation Insights

Mercer Capital has its finger on the pulse of the minerals market. Due to a variety of corporate structures (including master limited partnerships and Up-Cs) and complex capital structures (including preferred equity and non-traded.

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Mineral Aggregator Valuation Multiples Study Released

Auto Dealer Valuation Insights

Mercer Capital has its finger on the pulse of the minerals market. Due to a variety of corporate structures (including master limited partnerships and Up-Cs) and complex capital structures (including preferred equity and non-traded.

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Dual Class Share Structures: Is the Sun Setting Too Slowly?

Harvard Corporate Governance

The Russell 3000 increase in dual class shareholder structures may have been driven by new entrants to the index and SPAC transactions. Dual class share structures have been traditionally used to protect newly public companies from hostile takeovers or other forms of interference.

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Mineral Aggregator Valuation Multiples Study Released

Auto Dealer Valuation Insights

Mercer Capital has its finger on the pulse of the minerals market. Due to a variety of corporate structures (including master limited partnerships and Up-Cs) and complex capital structures (including preferred equity and non-traded.

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Modigliani-Miller Theorem - is it Any Good For Business Valuation?

Equilest

describe the relationship between the capital structure of the firm and its value. . It is often used as a benchmark for evaluating the financial decisions of firms and has been influential in shaping how firms approach financing and capital structure. . . To understand the theorem, it's helpful to consider two firms that are identical in every way except for their capital structure. Suppose also the weighted average cost of capital is 10%.

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SEC Finalizes New Clawback Rules

Harvard Corporate Governance

– Excludes revisions due to internal reorganizations impacting reportable segment disclosures or changes in capital structure (e.g., Posted by Mike Kesner, Lane Ringlee, Pay Governance LLC, on Tuesday, November 15, 2022 Editor's Note: Mike Kesner is Partner, and Lane Ringlee is Managing Partner at Pay Governance LLC. This post is based on their Pay Governance memorandum.

Dividends 146
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Executive Stock Options and Systemic Risk

Harvard Corporate Governance

We expect to find a positive relationship because the highly levered nature of banks’ capital structure should encourage the pursuit of activities that could entail systemic risk.

Banking 167
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Weekly Roundup: October 14-20, 2022

Harvard Corporate Governance

Venture Capital Advisers Not Off-Limits for SEC Scrutiny. Remark by Commissioner Uyeda to the Small Business Capital Formation Advisory Committee. Tags: Capital structure , Carve-outs , Charter & bylaws , Mergers & acquisitions , Shareholder voting , Shareholders agreements.

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Weekly Roundup: July 1-7, 2022

Harvard Corporate Governance

Tags: Bankruptcy , Capital formation , Capital structure , Distressed companies , Hedge funds , Institutional Investors , IPOs , REITs.

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Weekly Roundup: April 29-May 5, 2022

Harvard Corporate Governance

Tags: Accounting , Agency model , Capital structure , Cash flows , Dual-class stock , Financial reporting , Information environment , Restatements , Shareholder voting.

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What is the Modigliani–Miller Theorem?

Andrew Stolz

The theory suggests that a company’s capital structure and the average cost of capital does not have an impact on its overall value. . It doesn’t matter whether the company raises capital by borrowing money, issuing new shares, or by reinvesting profits in daily operations.

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Why Convertible Notes have an effect on IRC 409A Valuation?

Veristrat

In recent years, many small companies have utilized convertible notes instead of preferred stock to raise money from angel investors and venture capital firms. Why convertible notes should be properly structured? Why Convertible Notes effect on IRC 409A Valuation? About 409A Valuation.

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Global Investment Manager & Insurance Company: Vote FOR Appraisal

Appraisal Rights

The Principal Funds, a provider of a suite of investment products including ETFs and mutual funds, recommends voting for appraisal rights in its proxy guidelines.

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Weekly Roundup: July 29-August 4, 2022

Harvard Corporate Governance

Corporate Human Capital Disclosures: Early Evidence from the SEC’s Disclosure Mandate. Tags: Disclosure , ESG , Form 10-K , Human capital , Regulation S-K , SEC , SEC rulemaking , Securities regulation , Sustainability. Posted by the Harvard Law School Forum on Corporate Governance, on Friday, August 5, 2022 Editor's Note: This roundup contains a collection of the posts published on the Forum during the week of July 29-August 4, 2022.

Dividends 152
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Solar Integrated Roofing Corp. Completes Enerev Acquisition, Promotes Trent Crane to Regional VP of Sales

Benzinga

This transaction not only helps to simplify and clean up our capital structure ahead of a planned 2023 Nasdaq listing of our common stock, it will allow us to unlock the full profit potential of our 2021 acquisition of Enerev," said George B. HENDERSON, Nev., 05, 2023 (GLOBE NEWSWIRE) -- Solar Integrated Roofing Corp.

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EXCLUSIVE: Janus CEO Ramey Jackson Looks Back At First Year As A Public Company

Benzinga

Since we went public over a year ago, we've simplified our capital structure, acquired our largest competitor DBCI and purchased a company called Access Control Technologies.

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How to Avoid Chapter 22 in Restructuring Work for Energy Companies

Value Scope

The cash flows we isolate are tested for their ability to support debt, the new capital structure of the restructured firm. Click to Download: How to Avoid Chapter 22 in Restructuring Work for Energy Companies. Executive Summary. Issue.

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What Factors Are To Be Considered While Doing Business Valuation?

RNC

The working capital required to operate the business and how much is required to make improvements on the capital per year also affect the valuations. The net worth, capital structure, and debt are taken into consideration.

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Review the concept of WACC

Andrew Stolz

Weight average cost of capital (WACC) is a calculation of a firm’s cost of capital which includes all sources of capital such as common stocks, preferred stocks, and bonds. A firm uses a mix of equity and debt to minimize the cost of capital.

Beta 52
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Valuation Multiples for Chiropractic Clinics

Peak Business Valuation

The business appraiser may prefer to use this multiple as it normalizes differences in capital structure, fixed assets, and taxation. When valuing a chiropractic clinic, a business appraiser at Peak Business Valuation often uses valuation multiples for chiropractic clinics.

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Rolling Back Dodd-Frank: Investors’ and Banks’ Responses to Financial Market Deregulation

Reynolds Holding

Dodd-Frank created a new financial regulatory landscape with intensified federal oversight and an extensive set of regulations on banks, such as stress tests and stricter capital, trading, loan, and mortgage underwriting standards (Acharya and Richardson, 2012; Richardson et al.,

Banking 56
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Enerflex Ltd. Completes Acquisition of Exterran Corporation, Establishing a Premier Integrated Global Provider of Energy Infrastructure and Energy Transition Solutions

Benzinga

CAPITAL STRUCTURE. 700 million three-year secured revolving credit facility (the "Revolving Credit Facility"), and cash on hand, to fully repay the existing Enerflex and Exterran notes and revolving credit facilities and put in place a new debt capital structure. The balance of the Revolving Credit Facility will be used for committed capital expenditures and other general corporate purposes and will provide significant liquidity for Enerflex.

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Power & Utilities Investment Banking: How to Turn Yourself into an Electrified ESG Warrior

Brian DeChesare

Companies tend to offer high, stable dividend yields, and they finance their massive capital expenditures primarily with debt , with the highest leverage ratios of any industry outside of financial institutions. If they were, lenders wouldn’t accept 50% debt / total capital ratios.

Banking 79
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Appraiser Newsroom - Untitled Article

Appraiser Newsroom

Tom has extensive experience with a variety of fixed income and derivative products, such as interest rate swaps/swaptions, structured products, credit/FX/commodity derivatives, bonds/loans, convertible debt, warrants, and allocation of enterprise/equity values across simple and complex capital structures. He has performed valuations of securities along the entire capital structure including senior debt, subordinated debt and complex, multi-class equity structures.

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What is Weighted Average Cost of Capital (WACC)?

Andrew Stolz

Definition of Weighted Average Cost of Capital. The WACC is the average cost of raising capital from all sources, including equity, common shares, preferred shares, and debt. What Impacts the Weighted Average Cost of Capital? How to Calculate the Weighted Average Cost of Capital?

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Everything about Share Buybacks

Andrew Stolz

This usually happens when a company is making a deliberate and significant change to its capital structure. One significant benefit of buybacks for a country’s capital markets is that low-yielding, excess cash is returned to investors.

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Understanding Business Valuation: Why & When You Need One

GCF Value

The business valuation will also likely consider additional factors: The capital structure of the business Prospects for future earnings The market value of physical assets. Business Valuations are critical for sale, transition, and business planning. Steve Mize, ASA, November 18, 2020.

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How to Value My Business to Sell

Sun Acquisitions

Your business’ capital structure makeup. How much is your business worth? Business valuation, according to the Corporate Finance Institute , is the “process of determining the present value of a company or an asset.”. It’s not how much you think or hope the business is worth.

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AgroFresh Signs Definitive Transaction Agreement with Paine Schwartz Partners

Benzinga

As a private company with additional support from Paine Schwartz, AgroFresh will have access to the financial resources it needs to invest further in R&D and expansion efforts, while enabling the Company to address its capital structure. PHILADELPHIA, Nov. 22, 2022 (GLOBE NEWSWIRE) -- AgroFresh Solutions, Inc.

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Valuation Multiples for Tire Dealerships

Peak Business Valuation

This multiple may be preferred by the business appraiser because it normalizes differences in taxation, fixed assets, and capital structure. Demand for tire sales is expected to increase over the coming years. As such, now is a good time to enter the industry or prepare to exit.

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Estimating the Cost of Control Rights in the Corporate Loan Market

Reynolds Holding

These consequences include changes in investment, governance, and executive compensation, debt issuance and capital structure, innovation, employment, and financial reporting. Financial covenants have gone in and out of style over the last 30 years.

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Valuation Multiples for Iron & Steel Manufacturing

Peak Business Valuation

A business appraiser at Peak Business Valuation may prefer the EBITDA multiple because it normalizes differences in capital structure, taxation, and fixed assets. Valuation multiples for iron and steel manufacturing are heavily influenced by several factors.