Auto Dealer Valuation Insights

DECEMBER 19, 2023

Family businesses are built on long-term capital investments. Capital structure refers to the mix of debt and equity financing used to make those investments.

Capital Structure 52

Capital Structure Weighted Average Cost of Capital Equity Financing Finance 52

Sun Acquisitions

APRIL 26, 2024

As organizations embark on these transformative journeys, one critical aspect that demands meticulous consideration is the financing model. The risk-reward equation in M&A financing is a delicate balance, where potential pitfalls and gains play a pivotal role in shaping the merged entity’s future.

Finance 59

Finance Debt Financing Equity Financing Equity 59

Andrew Stolz

AUGUST 6, 2020

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. The lesser the cost of capital, the more the market value of the company.

Capital Structure 52

Capital Structure Debt Financing Equity Financing Finance 52

Equilest

JANUARY 8, 2023

The Modigliani-Miller theorem is a fundamental principle in finance that . describe the relationship between the capital structure of the firm and its value. . Their work was groundbreaking at the time and has had a lasting impact on finance. - Are they useful in Business Valuation? Let's discuss. Why is that?

Weighted Average Cost of Capital 40

Weighted Average Cost of Capital Business Valuation Capital Structure Debt Financing 40

Andrew Stolz

AUGUST 6, 2020

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. Definition of the Modigliani-Miller Theorem.

Debt Financing 52

Debt Financing Capital Structure Equity Finance 52

Andrew Stolz

AUGUST 5, 2020

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? Formula: [Cost of Equity * % of Equity] + [Cost of Debt * % of Debt *(1 – Tax Rate)] + [Cost of Preferred Stock * % of Preferred Stock].

Weighted Average Cost of Capital 52

Weighted Average Cost of Capital Equity Capital Structure Equity Financing 52

Valutico

APRIL 17, 2023

Determining a company’s “Cost of Capital” is vital in corporate finance and valuation, and the Weighted Average Cost of Capital (WACC) provides a specific way of doing so. These costs are then combined into a “weighted average” which represents the overall cost of financing a business.

Weighted Average Cost of Capital 52

Weighted Average Cost of Capital Discounted Cash Flow Beta Risk-free Rate 52