The Techniques Involved In Financially Valuating A Company Finance Essay - Free Essay Example

In the past thirty years, mergers and acquisitions of companies have seen a constant rise. Companies seem to feel that the fastest and the most effective way to rapidly expand is by acquiring other companies. Even in India, the merger and acquisition business deals amounted to $40 billion during the initial 2 months in the year 2007. The total estimated value of mergers and acquisitions in India for 2007 was greater than $100 billion, which doubles the amount of mergers and acquisitions in 2006. Some of the most popular acquisitions in the recent past have been that of acquisition of Legendary British car brands Jaguar and Land Rover by Tata Group at the cost of 4.2 billion dollars. Any form of acquisition or merger can occur via three ways. It can be a pure cash deal or a pure stares deal or a hybrid deal (partial cash and partial stares). Whichever be the case, the correct valuation of the company being acquired plays a major role in determining the success or failure of the deal. While evaluating any company, not only its monitory value, but also its synergy value is considered to be of utmost importance. Synergy refers to the potential additional value from combining two firms, either from operational or financial sources. Operating Synergy can come from higher growth or lower costs Financial Syne rgy can come from tax savings, increased debt capacity or cash slack. Correct calculation of the synergy value is the most important part of valuation for any acquisition. This value can be different for different company bidding for the same company. Having a correct estimation of the synergy value and the physical value of the company prevents the acquiring company from overpricing, thereby saving the companys resources, both financial and other. Statement of the problem In this paper, I would like to discuss problem of choosing the method to evaluate the company accurately. There are several methods to estimate different aspects of value for the same company, the combinations of these would tend to give an estimate of the value of the company which will be in accordance with the objective of the company going for the acquisition. Purpose of the study Any company opting for a merger or acquisition is taking a very calculated risk. Apart from the fact that significant resources accompany any acquisition, there are various internal and external factors involved with any acquisition. Hence, it is important to create fail safes. From this, it can be said that any merger or acquisition involves a continuous thought process and innovation at any required. Even after doing so, most of the acquisitions fail to deliver. There can be a lot of factors involved and responsible for the failure of any acquisition. But 90% of acquisitions fail because the company paid too much. It could have been that in the heat of a hostile takeover, the company overpriced its offer. But there can also be a second possibility that the company was not valuated properly. Hence from this study, I would like to: Understand the techniques involved in financially valuating a company Analyse each of the techniques for the advantages and their limitation s Conclude on my findings about the effectiveness of the current practices for valuation. Review of Literature Sources of Value To create any organisation is to actually create value. This value can be of several types. Employees, office, even the furniture are a source of value for the company. These sources can be divided into four main categories (Fig 1). Physical Capital- this forms the base of the pyramid. For any organisation be too formed, it first need to have a basic infrastructure in place. Its assets like building, land, machinery, etc. are the physical capital which is required to start building value for the company. Working capital- value is also created by the revenue generated by the organisation. The working capital mainly constitutes for the revenue and also the inventory turnover ratio of the company. It comes above the physical capital and is of vital importance since the main objective of any organisation is to make profit. Human Capital- to make any organisation work, employees are needed. And a significant investment is required to procure and train employees to align them wi th their work and also the main objectives of the organisation. They tend to become a source of value for the company. Although their worth is not physical in nature, it is an important constituents while calculating the synergy value of the organisation for an acquisition. Brand capital- this form of value can be a major profit generator for a company. Brand value is the value of the company products in the mind of the customer. If the brand value is high, customer surplus increases thereby increasing the value of the organisation. To create such a value for an organisation, significant resources are required. Value of a Company Although the company can be evaluated from its four sources of income, any company goes through the procedure of differentiating them into several sections and also considering the stakeholders opinion while valuating a company. There are several parts to assessment of the value of a company (fig 2). They are as follows: Intrinsic Value: This is the most basic value of a company. It is the future forecast of its cash flow and increase in revenue if the company continued to run under the same management without being acquired. In a nut shell, it can be said that the intrinsic value of a company is its present value on the expected future cash flow without any acquisition. Market Value: It is also commonly referred to as current market capitalisation. For an acquisition to be successful, sometimes the company have to pay a premium over the actual value so as to outbid their competitors. The market value is hence determined by the value in the minds of the competitors. Here, the company must determine the highest value of the competitor and compare its own assessment of value and make a decision. Purchase Price: Also known as the anticipated takeout value, it is the anticipated by the bidder for a company which will also be accepted by the target shareholders. While acquiring any company, it is important to consider the implications for the shareholders of the company since their approval is also necessary. It is therefore necessary to consider the value of the company in the shareholders mind, and how they should be compensated for the acquitition. Synergy Value: the most important and the most difficult to predict is the synergy value of the company. It is different for different bidders. Synergy value of a company depends upon the objective of acquisition. It is net present value of the cash flow that will result from the improvements made when the companies are combined. Most mergers fail because companies are not able to correctly anticipate thi s value and tend to overbid. Value Gap: It is the difference between the intrinsic value of the company and its purchase price. Usually in todays market, companies have to pay a premium to acquire another company, sometimes in a hostile takeover the bidding companies tend to pay more, here is where the value gap comes into play. This gap should therefore always be kept in mind while quoting a price for acquiring a company. Methods of Corporate Evaluation Asset-Based Methods: It starts with the calculation of total book value of the companys equity. It is the total value of company assets minus its debts. Equity is something which a company has which includes both tangible and intangible assets. Tangible assets are the cash, building, machinery, etc. and the intangible assets are the companys brand value, management, etc. The Balance Sheet: Cash Working Capital The process of evaluating a company by asset based methods starts by looking at a companys cash and equivalents and short-term investments. Divide it by the total number of outstanding shares and this will give the percentage of cash in the current share value of the company. Acquiring companies with excess cash can be very profitable in terms of acquiring capital for new product development and the capital needed to be infused to set up a new facility. Companies which are forecasted to have a bad future can also improvise and improve tremendously after having good cash at hand. The ratio of working capital to the capitalisation can also give a fair assessment of the company. Working capital is the difference between current assets and the current liabilities. market capitalisation can also be called the capital structure Working capital represents the funds that a company has ready access to for use in conducting its everyday business. If you buy a company for close to its w orking capital, you have essentially bought a dollar of assets for a dollar of stock price, not a bad deal, either. Shareholders Equity Book Value: Shareholders equity  is the actual book value of the company. It includes everything that a firm has on its books of accounts from its liquid assets like cash, office, real estate assets, its retained earnings to everything. It is the measure of the degree of liquidity which a company has if all of its assets were to be sold off. To calculate book value per share, take a companys shareholders equity and divide it by the current number of shares outstanding. This can then be used for the calculation of price to book ratio. Book value is a simple and a straightforward concept and it is considered to be better when the cost incurred for the acquisition is closer to the book value of the company. The shareholders equity can also be used to find the return on equity. Return on equity is a measure of earnings a company generates in four quarters compared to its shareholders equity. It is measured as a percentage. ROE can be used by companies to find whether profit s are possible with little capital investment. Coca Cola, for instance, does not require constant spending to upgrade equipment the syrup-making process does not regularly move ahead by technological leaps and bounds. In fact, high ROE companies are so attractive to some investors that they will take the ROE and average it with the expected earnings growth in order to figure out a fair multiple. This is why a pharmaceutical company like Merck can grow at 10% or so every year but consistently trade at 20 times earnings or more. Intangibles Intangibles are assets of a company like brand, which although not quantifiable form a very important part of the organisation. IBM Balance Sheet Assets $Mil Cash 5,216.6 Other Current Assets 32,099.4 Long-Term Assets 46,640.0 Total 83,956.0  Liabilities and Equity $Mil Current Liabilities 30,239.0 Long-Term Liabilities 31,625.0 Shareholders Equity 22,092.0 Total 83,956.0 The Piecemeal Company Finally, a company can sometimes be worth more divided up rather than all in one piece. This can happen because there is a hidden asset that most people are not aware of, like land purchased in the 1980s that has been kept on the books at cost despite dramatic appreciation of the land around it, or simply because a diversified company does not produce any synergies. Sears, Dean Witter Discover and Allstate are all worth a heck of a lot more broken apart as separate companies than they ever were when they were all together. Keeping an eye out for a company that can be broken into parts worth more than the whole makes sense, especially in this day and age when so many conglomerates are crumbling into their component parts. Using Comparables The most common way to value a company is to use its earnings. Earnings, also called net income or net profit, is the money that is left over after a company pays all of its bills. To allow for apples-to-apples comparisons, most people who look at earnings measure them according to  earnings per share (EPS). You arrive at the earnings per share by simply dividing the dollar amount of the earnings a company reports by the number of shares it currently has outstanding. Thus, if XYZ Corp. has one million shares outstanding and has earned one million dollars in the past 12 months, it has a trailing EPS of $1.00. (The reason it is called a trailing EPS is because it looks at the last four quarters reported the quarters that trail behind the most recent quarter reported. $1,000,000 = $1.00 in earnings per share (EPS) 1,000,000 shares The earnings per share alone means absolutely nothing, though. To look at a companys earnings relative to its price, most investors employ the  price/earnings (P/E) ratio. The P/E ratio takes the stock price and divides it by the last four quarters worth of earnings. For instance, if, in our example above, XYZ Corp. was currently trading at $15 a share, i t would have a P/E of 15. $15 share price = 15 P/E $1.00 in trailing EPS Is the P/E the Holy Grail? There is a large population of individual investors who stop their entire analysis of a company after they figure out the trailing P/E ratio. With no regard to any other form of valuation, this group of unFoolish investors blindly plunge ahead armed with this one ratio, purposefully ignoring the vagaries of equity analysis. Popularized by Ben Graham (who used a number of other techniques as well as low P/E to isolate value), the P/E has been oversimplified by those who only look at this number. Such investors look for low P/E stocks. These are companies that have a very low price relative to their trailing earnings. Also called a multiple, the P/E is most often used in comparison with the current rate of growth in earnings per share. The Foolish assumption is that for a growth company, in a fairly valued situation the price/earnings ratio is about equal to the rate of EPS growth. In our example of XYZ Corp., for instance, we find out that XYZ Corp. grew its earnings per share at a 13% over the past year, suggesting that at a P/E of 15 the company is pretty fairly valued. Fools believe that P/E only makes sense for growth companies relative to the earnings growth. If a company has lost money in the past year or has suffered a decrease in earnings per share over the past twelve months, the P/E becomes less useful than other valuation methods we will talk about later in this series. In the end, P/E has to be viewed in the context of growth and cannot be simply isolated without taking on some significant potential for error. Are Low P/E Stocks Really a Bargain? With the advent of computerized screening of stock databases, low P/E stocks that have been mispriced have become more and more rare. When Ben Graham formulated many of his principles for investing, one had to search manually through pages of stock tables in order to ferret out companies that had extremely low P/Es. Today, all you have to do is punch a few buttons on an online database and you have a list as long as your arm. This screening has added efficiency to the market. When you see a low P/E stock these days, more often than not it deserves to have a low P/E because of its questionable future prospects. As intelligent investors value companies based on future prospects and not past performance, stocks with low P/Es often have dark clouds looming in the months ahead. This is not to say that you cannot still find some great low P/E stocks that for some reason the market has simple overlooked you still can and it happens all the time. Rather, you need to confirm the va lue in these companies by applying some other valuation techniques. The Price-to-Sales Ratio Every time a company sells a customer something, it is generating revenues. Revenues are the sales generated by a company for peddling goods or services. Whether or not a company has made money in the last year, there are always revenues. Even companies that may be temporarily losing money, have earnings depressed due to short-term circumstances (like product development or higher taxes), or are relatively new in a high-growth industry are often valued off of their revenues and not their earnings. Revenue-based valuations are achieved using the price/sales ratio, often simply abbreviated PSR. The price/sales ratio takes the current market capitalization of a company and divides it by the last 12 months trailing revenues. The market capitalization is the current market value of a company, arrived at by multiplying the current share price times the shares outstanding. This is the current price at which the market is valuing the company. For instance, if our example company XY Z Corp. has ten million shares outstanding, priced at $10 a share, then the market capitalization is $100 million. Some investors are even more conservative and add the current long-term debt of the company to the total current market value of its stock to get the market capitalization. The logic here is that if you were to acquire the company, you would acquire its debt as well, effectively paying that much more. This avoids comparing PSRs between two companies where one has taken out enormous debt that it has used to boast sales and one that has lower sales but has not added any nasty debt either. Market Capitalization = (Shares Outstanding * Current Share Price) + Current Long-term Debt The next step in calculating the PSR is to add up the revenues from the last four quarters and divide this number into the market capitalization. Say XYZ Corp. had $200 million in sales over the last four quarters and currently has no long-term debt. The PSR would be: (10,000,000 shares * $10/share) + $0 debt PSR = = 0.5 $200 million revenues The PSR is a measurement that companies often consider when making an acquisition. If you have ever heard of a deal being done based on a certain multiple of sales, you have seen the PSR in use. As this is a perfectly legitimate way for a company to value an acquisition, many simply expropriate it for the stock market and use it to value a company as an ongoing concern. Uses of the PSR The PSR is often used when a company has not made money in the last year. Unless the corporation is going out of business, the PSR can tell you whether or not the concerns sales are being valued at a discount to its peers. If XYZ Corp. lost money in the past year, but has a PSR of 0.50 when many companies in the same industry have PSRs of 2.0 or higher, you can assume that, if it can turn itself around and start making money again, it will have a substantial upside as it increases that PSR to be more in line with its peers. There are some years during recessions, for example, when none of the auto companies make money. Does this mean they are all worthless and there is no way to compare them? Nope, not at all. You just need to use the PSR instead of the P/E to measure how much you are paying for a dollar of sales instead of a dollar of earnings. Another common use of the PSR is to compare companies in the same line of business with each other, using the PSR in conjunction w ith the P/E in order to confirm value. If a company has a low P/E but a high PSR, it can warn an investor that there are potentially some one-time gains in the last four quarters that are pumping up earnings per share. Finally, new companies in hot industries are often priced based on multiples of revenues and not multiples of earnings. What Level of the Multiple is Right? Multiples may be helpful for comparing two compnies, but which multiples is right? Many look at estimated earnings and estimate what fair multiple someone might pay for the stock. For example, if XYZ Corp. has historically traded at about 10 times earnings and is currently down to 7 times earnings because it missed estimates one quarter, it would be reasonable to buy the stock with the expectation that it will return to its historic 10 times multiple if the missed quarter was only a short-term anomaly. When you project fair multiples for a company based on forward earnings estimates, you start to make a heck of a lot of assumptions about what is going to happen in the future. Although one can do enough research to make the risk of being wrong as marginal as possible, it will always still exist. Should one of your assumptions turn out to be incorrect, the stock will probably not go where you expect it to go. That said, most of the other investors and companies out there are using this same approach, making their own assumptions as well, so, in the worst-case scenario, at least you wont be alone. A modification to the multiple approach is to determine the relationship between the companys P/E and the average P/E of the SP 500. If XYZ Corp. has historically traded at 150% of the SP 500 and the SP is currently at 10, many investors believe that XYZ Corp. should eventually hit a fair P/E of 15, assuming that nothing changes. The trouble is, things do change. Key Valuation Ratios for IBM (April 2003)   Price Ratios   Company   Industry   SP 500 Current P/E Ratio 38.2 116.7 34.9 P/E Ratio 5-Year High 61.4 184.5 64.2 P/E Ratio 5-Year Low 14.5 9.6 25.7 Price/Sales Ratio 1.67 1.28 1.29 Price/Book Value 5.95 2.83 2.67 Price/Cash Free Cash Flows Methods Despite the fact that most individual investors are completely ignorant of  cash flow, it is probably the most common measurement for valuing public and private companies used by investment bankers. Cash flow is literally the cash that flows through a company during the course of a quarter or the year after taking out all fixed expenses. Cash flow is normally defined as  earnings before interest, taxes, depreciation and amortization (EBITDA). Why look at earnings before interest, taxes, depreciation and amortization? Interest income and expense, as well as taxes, are all tossed aside because cash flow is designed to focus on the operating business and not secondary costs or profits. Taxe s especially depend on the vagaries of the laws in a given year and actually can cause dramatic fluctuations in earnings power. For instance, Cyberoptics enjoyed a 15% tax rate in 1996, but in 1997 that rate more than doubled. This situation overstates CyberOptics current earnings and understates its forward earnings, masking the companys real operating situation. Thus, a canny analyst would use the growth rate of  earnings before interest and taxes (EBIT)instead of net income in order to evaluate the companys growth. EBIT is also adjusted for any one-time charges or benefits. As for  depreciation  and  amortization, these are called  non-cash charges, as the company is not actually spending any money on them. Rather, depreciation is an accounting convention for tax purposes that allows companies to get a break on capital expenditures as plant and equipment ages and becomes less useful. Amortization normally comes in when a company acquires another company at a premium to its shareholders equity a number that it account for on its balance sheet as goodwill and is forced to amortize over a set period of time, according to generally accepted accounting principles (GAAP). When looking at a companys operating cash flow, it makes sense to toss aside accounting conventions that might mask cash strength. In a private or public market acquisition, the price-to-cash flow multiple is normally in the 6.0 to 7.0 range. When this multiple reaches the 8.0 to 9.0 range, the acquisition is normally considered to be expensive. Some counsel selling companies when their cash flow multiple extends beyond 10.0. In a leveraged buyout (LBO), the buyer normally tries not to pay more than 5.0 times cash flow because so much of the acquisition is funded by debt. A LBO also looks to pay back all the cash used for the buyout within six years, have an EBITDA of 2.0 or more times the interest payments, and have total debt of only 4.5 to 5.0 ti mes the EBITDA. IBMs Income Statement Annual Income Statement (Values in Millions) 12/2002 12/2001 Sales 81,186.0 85,866.0 Cost of Sales 46,523.0 49,264.0 Gross Operating Profit 34,663.0 36,602.0 Selling, General Admin. Expense 23,488.0 22,487.0 Other Taxes 0.0 0.0 EBITDA 11,175.0 14,115.0 Depreciation Amortization 4,379.0 4,820.0 EBIT 6,796.0 9,295.0 Other Income, Net 873.0 1,896.0 Total Income Avail for Interest Exp. 7,669.0 11,191.0 Interest Expense 145.0 238.0 Pre-tax Income 7,524.0 10,953.0 Income Taxes 2,190.0 3,230.0 Total Net Income 3,579.0 7,723.0 Free Cash Flow  goes one step further. A company cannot drain all its cash flow to survive and grow is must invest in capital and hold enough inventory and receivables to support its customers. So after adding back in the non-cash items, we subtract out new capital expenditures and additions to working capital. A bare-bones view of IBMs free cash flows is given below. IBM: Free Cash Flows Fiscal year-end: December TTM = Trailing 12 Months  1999 2000 2001 TTM Operating Cash Flow 10,111 9,274 14,265 14,615 Capital Spending 5,959 5,616 5,660 5,083 = Free Cash Flow 4,152 3,658 8,605 9,532 How to Use Cash Flow Cash flow is the only method that makes sense in many situations. For example, it is commonly used to value industries that involve tremendous up-front capital expenditures and companies that have large amortization burdens. Cable TV companies like Time-Warner Cable and TeleCommunications have reported negative earnings for years due to the huge capital expense of building their cable networks, even though their cash flow has actually grown. This is because huge depreciation and amortization charges have masked their ability to generate cash. Sophisticated buyers of these properties use cash flow as one way of pricing an acquisition, thus it makes sense for investors to use it as well. It is also commonly used method in venture capital financings because it focuses on what the venture investor is actually buying, a piece of the future operations of the company. Its focus on future cash flows also coincides nicely with a critical concern of all venture investors, the companys abilit y to sustain its future operations through internally generated cash flow. The premise of the discounted free cash flow method is that company value can be estimated by forecasting future performance of the business and measuring the surplus cash flow generated by the company. The surplus cash flows and cash flow shortfalls are discounted back to a present value and added together to arrive at a valuation. The discount factor used is adjusted for the financial risk of investing in the company. The mechanics of the method focus investors on the internal operations of the company and its future. The discounted cash flow method can be applied in six distinct steps. Since the method is based on forecasts, a good understanding of the business, its market and its past operations is a must. The steps in the discounted cash flow method are as follows: Develop debt free projections of the companys future operations. This is clearly the critical element in the valuation. The more clo sely the projections reflect a good understanding of the business and its realistic prospects, the more confident investors will be with the valuation its supports. Quantify positive and negative cash flow in each year of the projections. The cash flow being measured is the surplus cash generated by the business each year. In years when the company does not generate surplus cash, the cash shortfall is measured. So that borrowings will not distort the valuation, cash flow is calculated as if the company had no debt. In other words, interest charges are backed out of the projections before cash flows are measured. Estimate a terminal value for the last year of the projections. Since it is impractical to project company operations out beyond three to five years in most cases, some assumptions must be made to estimate how much value will be contributed to the company by the cash flows generated after the last year in the projections. Without making such assumptions, the value gene rated by the discounted cash flow method would approximate the value of the company as if it ceased operations at the end of the projection period. One common and conservative assumption is the perpetuity assumption. This assumption assumes that the cash flow of the last projected year will continue forever and then discounts that cash flow back to the last year of the projections. Determine the discount factor to be applied to the cash flows. One of the key elements affecting the valuation generated by this method is the discount factor chosen. The larger the factor is, the lower the valuation it will generate. This discount factor should reflect the business and investment risk involved. The less likely the company is to meet its projections, the higher the factor should be. Discount factors used most often are a compromise between the cost of borrowing and the cost of equity investment. If the cost of borrowed money is 10% and equity investors want 30% for their funds, the dis count factor would be somewhere in between in fact, the weighted-average cost of capital. Apply the discount factor to the cash flow surplus and shortfall of each year and to the terminal value. The amount generated by each of these calculations will estimate the present value contribution of each years future cash flow. Adding these values together estimates the companys present value assuming it is debt free. Subtract present long term and short term borrowings from the present value of future cash flows to estimate the companys present value. The following table illustrates the computations made in the discounted cash flow method. The chart assumes a discount factor of 13% (IBMs estimated weighted-average cost of capital) and uses the growing perpetuity assumption to generate a residual value for the cash flows after the fifth year. Valuation for IBM 2-stage growth model Stage 1 10%   growth Stage 2 5.7%   growth End of year 2002 2003 2004 2005 2006 2007 2008 Revenue 81.2 89.32 98.252 108.0772 118.8849 130.7734 138.2275 -Expenses -67.99 -74.789 -82.2679 -90.4947 -99.5442 -109.499 -115.74 -Depreciation -4.95 -5.445 -5.9895 -6.58845 -7.2473 -7.97202 -6.9413 EBIT 8.26 9.086 9.9946 10.99406 12.09347 13.30281 15.5462 EBIT(1-t) 5.9 6.49 7.139 7.8529 8.63819 9.502009 11.10443 +Depreciation 4.95 5.445 5.9895 6.58845 7.247295 7.972025 6.941298 -CapEx -4.31 -4.741 -5.2151 -5.73661 -6.31027 -6.9413 -6.9413 -Change in WC -0.9 -0.99 -1.089 -1.1979 -1.31769 -1.44946 -1.53208 FCFF 5.64 6.204 6.8244 7.50684 8.257524 9.083276 9.572354 235.2537 Total 6.204 6.8244 7.50684 8.257524 2 44.3369 PV 5.651872 5.663768 5.67569 5.687636 153.3175 Total PV 175.9964 less debt -61.864 billion Equity value 114.1324 billion divided by 1.69 gives 67.53397 per share Option-Based Methods Executives continue to grapple with issues of risk and uncertainty in evaluating investments and acquisitions. Despite the use of net present value (NPV) and other valuation techniques, executives are often forced to rely on instinct when finalizing risky investment decisions. Given the shortcomings of NPV, real options analysis has been suggested as an alternative approach, one that considers the risks associated with an investment while recognizing the ability of corporations to defer an investment until a later period or to make a partial investment instead. In short, investment decisions are often made in a way that leaves some options open.  The simple NPV rule does not give the correct conclusion if uncertainty can be ma naged. In acquisitions and other business decisions, flexibility is essential more so the more volatile the environment and the value of flexibility can be taken into account explicitly, by using the real-options approach. Financial options are extensively used for risk management in banks and firms. Real or embedded options are analogs of these financial options and can be used for evaluating investment decisions made under significant uncertainty. Real options can be identified in the form of opportunity to invest in a currently available innovative project with an additional consideration of the strategic value associated with the possibility of future and follow-up investments due to emergence of another related innovation in future, or the possibility of abandoning the project. The option is worth something because the future value of the asset is uncertain. Uncertainty increases the value of the option, because if the uncertainty is interpreted as the variance, there a re possibilities to higher profits. The loss on the option is equal to the cost of acquiring it. If the project turns out to be non-profitable, you always have the choice of non-exercising. More and more, the real options approach is finding its place in corporate valuation. Assignment: Special Applications What adjustments to the valuation approaches discussed above would have to me made in the following special situations? Valuation in an MA context Valuation of a company in distress Valuation of a company facing corporate financial restructuring.