Capital Structure in 5 Minutes
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.
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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.
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.
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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.
Reynolds Holding
FEBRUARY 7, 2024
In a recent paper, we make the case for a smart contract-based automated restructuring framework that can be used by any firm that issues equity and debt securities in tokenized form. Since it is now possible to administer capital structures on the blockchain, opening them up to smart contract automation has become a reality.
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?
Scott Mashuda
JANUARY 9, 2024
Entrepreneurial business owners can gain a substantial competitive edge in the lower middle market by recognizing the benefits of balance sheet restructuring, particularly when private equity collaborates as a partner for a defined period of time or a family office serves as your evergreen business partner.
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.
Brian DeChesare
FEBRUARY 9, 2022
Ask the average student or professional in the finance industry about their long-term career goal, and they’ll usually say, “ private equity mega-funds. ”. Similar to middle market private equity , though, there are some definitional problems here. Definitions: What is a Private Equity Mega-Fund?
Lighter Capital
FEBRUARY 13, 2024
Equity dilution is part of growing a successful startup. How to Prevent Excessive Equity Dilution in Your Startup 1. Bootstrap your way to early milestones If you can, focus on growing the business organically before you pursue equity funding. Take only as much capital as you need More isn’t always better.
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.
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.
Valutico
APRIL 12, 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.
Valutico
FEBRUARY 27, 2024
Different types of discount rates such as risk-free rate, cost of equity, or cost of debt, are used contextually in financial analysis. Cost of Equity: The cost of equity represents the return required by equity investors to compensate them for the risk of owning a company’s shares.
Brian DeChesare
JUNE 29, 2022
If you’re thinking about exit opportunities and can’t decide between private equity and hedge funds , activist hedge funds might be your solution. Similar to private equity firms, they operate on longer time frames, influence companies’ operations and finances, and might catalyze major changes, such as spin-offs or acquisitions.
Appraiser Newsroom
APRIL 24, 2024
Additionally, she completes valuations of financial instruments including preferred and common stock in complex structures for publicly and privately held companies and equity derivatives. Samantha Albert | Mercer Capital Samantha Albert is a vice president with Mercer Capital.
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].
Lighter Capital
JANUARY 11, 2022
At Lighter Capital, our Investment Team encounters a lot of questions from startup founders about the features of our financing solutions, such as early payoff provisions, minimum return requirements, warrants, debt covenants , and even whether we require a personal guarantee. Do all startup loans come with warrants? Let's dive in.
Reynolds Holding
DECEMBER 10, 2023
As a capital allocation decision, share buybacks intersect all three of the main corporate finance activities of investing, financing, and dividends [1]. The point being that although the logic for each of these rationales is distinct, the very act of doing a share buyback influences the whole of the corporate finance ecosystem.
Benzinga
FEBRUARY 6, 2024
(NASDAQ: ZFOX ) ("ZeroFox"), a leading provider of external cybersecurity, today announced that it has entered into a definitive agreement to be acquired by Haveli Investments, a technology-focused private equity firm, in an all-cash transaction with an enterprise value of approximately $350 million.
Andrew Stolz
APRIL 3, 2020
Leveraged Buyout (“LBO”) is a quite common term in Corporate Finance field. It refers to acquiring a company (or its part) and financing it with debt. The buyer (the “sponsor”) raises debt and equity to acquire the target. It borrows the majority of the purchase price and contributes proportionately small equity investment.
Simply Treasury
AUGUST 2, 2022
DEBRA Proposal (« Debt-Equity Bias Reduction Allowance). In early May, the European Commission unveiled its proposal for a "DEBRA" (Debt-equity bias reduction allowance) Directive, aimed at encouraging companies to finance their investments with equity and capital contributions, instead of resorting to loans (bank or other).
Value Scope
AUGUST 31, 2020
Commodities, including oil and gas, are far more volatile than other asset classes like fixed-income and equities. This is how we use it in finance, economics, etc. The cash flows we isolate are tested for their ability to support debt, the new capital structure of the restructured firm. Why is Energy Different?
Reynolds Holding
MAY 10, 2023
Some Chapter 11 proceedings yield a stand-alone restructuring where either (1) existing equity interests are eliminated and creditors emerge as the debtor’s new equity owners in exchange for their pre-bankruptcy claims or (2) a “plan sponsor” injects new capital in to the debtor in exchange for equity in the reorganized entity.
Andrew Stolz
NOVEMBER 17, 2021
When I started in finance, buybacks were almost unheard of; now, companies prefer to distribute cash through buybacks. This usually happens when a company is making a deliberate and significant change to its capital structure. Consider research done by Kroen (2021) that shows that since about 1998, U.S.
Reynolds Holding
APRIL 17, 2022
Investors are willing to finance an innovation project when early results from the project – revenue trends, user growth, clinical trial data – reliably indicate future profits. The most innovative part of the economy, the venture capital (VC) market, has evolved structures to address these agency problems. But there’s a catch.
Musings on Markets
FEBRUARY 27, 2023
To fund the business, you can either use borrowed money (debt) or owner's funds (equity), and while both are sources of capital, they represent different claims on the business. Even government-owned businesses fall under its umbrella, with the key difference being that equity is provided by the taxpayers.
Benzinga
APRIL 12, 2023
("BIP") (NYSE: BIP , TSX: BIP ), through its subsidiary Brookfield Infrastructure Corporation ("BIPC") and its institutional partners (collectively, "Brookfield Infrastructure"), jointly announce a definitive agreement for Triton to be acquired in a cash and stock transaction valuing the Company's common equity at approximately $4.7
Class VI Partner
JULY 28, 2021
Balance Sheet A Balance Sheet is an accounting record for a company that lists a company’s assets, liabilities, and shareholders’ equity. In particular, a Buy-Sell Agreement will typically provide for what happens in the event that one of the shareholders leaves the business and he or she needs to dispose of an equity stake in the business.
Brian DeChesare
AUGUST 10, 2022
Oil & Gas Investment Banking Definition: In oil & gas investment banking, professionals advise companies that search for, produce, store, transport, refine, and market energy on raising debt and equity and completing mergers and acquisitions. Midstream: 85 (mix of asset deals, M&A, debt, and even some private equity activity).
Benzinga
JULY 10, 2023
Additionally, overall leverage defined as debt as a multiple of adjusted EBITDA is reduced significantly, debt service costs have been reduced significantly, resulting in enhanced equity value, and accelerating our plans to list our common stock on a national securities exchange. million of SMGI preferred stock and received a $3.0
Simply Treasury
MARCH 25, 2020
After the 2008 Global Finance Crisis, everyone thought they saw the worst. Medicine terminology used by finance too. Contamination and contagion are also terms borrowed by finance from medicine. But isn't it just "monetary financing," which when rates at zero stop, will be a problem? equities) as it does today.
Appraiser Newsroom
FEBRUARY 16, 2022
He has over 21 years of experience in corporate finance, specializing in business and securities valuations, real options and derivative valuations, and risk management. Bob Bartell, CFA , is president of corporate finance for Kroll. Harris Antoniades, Ph.D., Baker is also a representative of Independent Investment Bankers Corp.,
Valutico
SEPTEMBER 22, 2023
It represents the total market value of the company’s equity. Ratios i) EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization) EV/EBITDA is a valuation ratio used to assess a company’s overall profitability before accounting for financing decisions, taxes, and non-cash expenses.
Appraiser Newsroom
JULY 5, 2022
Anastis Anastasiou , MBA is a Director in the Forensic & Litigation Consulting segment at FTI Consulting , with an expertise in forensic finance, valuation, dispute advisory and financial investigations. Mr. Anastasiou specializes in digital assets and decentralized finance (“DeFi”).
Reynolds Holding
APRIL 28, 2022
24] When PIPE investors step-in to replace the financing that exits when there are high-redemptions – how does that shape the negotiations, and to what extent are remaining investors harmed by dilution because PIPE investors demand better terms? SPACs – The Equity “Complex Product”. Or are those investors remaining for other reasons?
Shephard Mullin M&A
APRIL 21, 2020
Just below the surface, however, lie significant issues that potential purchasers must consider when pursuing the acquisition of a distressed company out-of-court, including: Structure.
Reynolds Holding
APRIL 25, 2023
We propose a theory of corporate finance based on the idea that firm managers maximize EPS: the difference between net operating profits and interest expense divided by total shares outstanding. To see this distinction, consider the choice of capital structure: whether to use equity financing or a combination of equity and debt.
Brian DeChesare
SEPTEMBER 13, 2023
Ask anyone interested in distressed debt hedge funds for “the pitch,” and they’ll probably mention one of the following: “It’s like long/short equity or credit , but more interesting!” Distressed investing offers equity-like returns with lower risk.” Distressed assets offer non-correlated returns, similar to global macro.”
Value Scout
FEBRUARY 13, 2023
It involves the partial sale of the company to private equity firms or venture capitalists. Recapitalization helps stabilize the capital structure of a company by restructuring its equity and debt. It usually involves an exchange of one form of financing for another. What is Recapitalization?
Brian DeChesare
MAY 24, 2023
“Event-driven hedge funds” is one of the more confusing labels in finance. A long/short equity fund could find an undervalued company, like it for reasons A, B, and C, and argue that its price will increase by 50%. But lock-up periods are longer than most long/short equity funds.
Brian DeChesare
JUNE 1, 2022
Power and Utilities Investment Banking Definition: In power/utilities IB, bankers advise companies that produce, transmit, and distribute electricity, natural gas, and water on raising debt and equity and completing mergers and acquisitions. ” Different banks classify their power & utilities groups differently.
Brian DeChesare
JULY 27, 2022
Anyone who’s ever traded stocks can understand long/short equity , and even simple global macro trades are easy to explain to the average person. To simplify, we can say that credit hedge funds operate in three main areas: Long/Short Credit – It’s similar to long/short equity , but with bonds rather than stocks. See the example above.
Valutico
AUGUST 23, 2023
These cash flows typically include operating income, tax payments, and changes in working capital and capital expenditures. b) Determining the Discount Rate: The discount rate, often the weighted average cost of capital (WACC), reflects the risk associated with the company’s cash flows.
Valutico
AUGUST 10, 2023
These cash flows typically include operating income, tax payments, and changes in working capital and capital expenditures. b) Determining the Discount Rate: The discount rate, often the weighted average cost of capital (WACC), reflects the risk associated with the company’s cash flows.
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