Valuation for Mergers, Buyouts, and Restructuring (Wiley Finance) [Hardcover]

Enrique R. Arzac (Author)

Book Description

ISBN-10: 0471644447 | ISBN-13: 978-0471644446 | Publication Date: February 27, 2004 | Edition: 1st

When should you acquire a target or enter a new business? How do you go about structuring and valuing leveraged buyout transactions? What do you do id the application of the weighted average cost of capital approach is not correct? Answers to these commonly encountered valuation problems and more are given right here in this complete valuation toolkit for mergers, buyouts, and restructuring. Enrique Arzac, an internationally recognized authority on the subject, provides an up-to-date, comprehensive synthesis of current valuation theory and practice, including free cash flow valuation, financing and valuation of leveraged buyouts, real option analysis for entry and exit decisions, contract design to resolve disagreements about value, and the valuation of special offer structures.

Editorial Reviews

Review

“Specialist analysis of the situation in the US that combines both theory and practice…” (Long Range Planning, 38, 2005)

Review

"Enrique Arzac has provided an excellent analytical framework for the LBO business."
—William T. Comfort, Chairman, Citigroup Venture Capital

"Enrique Arzac has created a masterpiece—his work combines the theoretical with the practical. He has created an invaluable reference guide that is thoughtful, complete and very user friendly. He provides insight into the theory behind core valuation, LBO’s, and options pricing, which creates the foundation for mergers, buyouts and restructuring. In addition to the theoretical, he provides practical insight into deal structuring and deal dynamics. His work should be standard material for all incoming associates."
—James P. McVeigh, Managing Director, Corporate & Investment Banking, Banc of America Securities

"This first-rate book of applied financial theory provides the tools for financial institutions and capital market participants seeking a methodology for comparing, contrasting, and evaluating investment opportunities and options. By incorporating over 30 years of research, teaching, and practical experience, Professor Arzac has created a text that us not only timely, but timeless in its usefulness to anyone interested in learning the applications of financial theory for the best and most useful allocation of the scarcest economic resource in the world—capital."
—William W. Priest, Co-Managing Partner, Steinberg, Priest and Sloane Capital Management and Former Chairman and CEO of Credit Suisse Asset Management

"There are two important aspects in graduate business education. The first is acquiring a thorough understanding of the theories of modern finance and the second is acquiring an appreciation for how these theories can be applied to important decisions. Enrique Arzac has taken on this task and made it a successful venture for readers of this book. Unlike other texts on valuation, he explains the reasons for the process and sequence that he recommends rather than just providing the ingredients and the recipe without explanation. This is a welcome addition to the literature in applied corporate finance."
—Joel M. Stern, Managing Partner, Stern, Stewart & Co.

See all Editorial Reviews

Product Details

• Hardcover: 384 pages
• Publisher: John Wiley and Sons, Inc.; 1st edition (February 27, 2004)
• Language: English
• ISBN-10: 0471644447
• ISBN-13: 978-0471644446
• Product Dimensions: 9.9 x 7.1 x 0.9 inches
• Shipping Weight: 1.6 pounds
• Average Customer Review: 4.1 out of 5 stars  See all reviews (20 customer reviews)
• Amazon Best Sellers Rank: #1,089,884 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Customer Reviews

Most Helpful Customer Reviews

38 of 38 people found the following review helpful:

5.0 out of 5 stars Excellent Balance Between Theory & Practice, February 8, 2005

By 

Kumaresan Kanagasabai (New York, New York) - See all my reviews
(REAL NAME)   

This review is from: Valuation for Mergers, Buyouts, and Restructuring (Wiley Finance) (Hardcover)

In my consulting career, I have worked on lots of models to value M& A candidates, to restructure debt, to perform due diligence etc. My main problem was that I always found it difficult to get a good reference book on valuation. Most books just give the basics of DCF and treat valuation in a straightforward manner.
Arzac's book on the other hand treats valuation from a practical and theoretical perspective and is supported by research evidence. I found his book to be very helpful as it contained the different types of valuation tools and arrangements commonly found in practice i.e. adjusted present value, earnouts, original issue discount, synergies and scenario analysis, contingent clauses, entry, foothold and exit options etc. I am an engineer by training so I found the technical notes at the end of the book to be very handy. In addition, the CD accompanying Arzac's textbook is very useful as it provided many essential valuation tools such as option pricing, debt capacity calculator etc. I highly recommend this book to anyone with a serious interest in corporate finance, consulting and investment banking

41 of 43 people found the following review helpful:

3.0 out of 5 stars Purely for Reference, January 13, 2006

By 

J. Fu "just your normal guy" (Berkeley, CA United States) - See all my reviews
(REAL NAME)   

This review is from: Valuation for Mergers, Buyouts, and Restructuring (Wiley Finance) (Hardcover)

As an M&A finance practitioner, I am torn between giving this book a 3-star or 4-star rating. As many reviewers have noted, this is structured to be a reference book. There is more math than is typically needed or used in most small or medium-sized transactions, and there is very little introductory material for the uninitiated to get their bearings. Instead, the books delves straight into valuation exercises that are at times even more difficult than what I have encountered in the profession. The examples, while numerous and varied, are often reviewed much too quickly, and occasionally with so many permutations and small digressions that it is difficult to keep track of the purpose of the original endeavor. And as good students know, it is very hard to remember how to do something when you do not know *why* you are doing it. As such, it is difficult to recommend this book with much enthusiasm to anyone who does not at least have a few transactions under their belt because as a general guide it does not at all do the trick.

However, for more experienced users, it can come in handy, although I will still have to say that information is unnecessarily difficult to find. I feel like this book is so dense that it would be much more effective in an electronic (and hence, searchable) version. That being said, I really enjoyed a few chapters, including Chapter 9, which had some excellent examples of the effect different tax treatments have on a transaction. It came in very handy for a deal I was working on where I had to deal with NOLs.

18 of 20 people found the following review helpful:

5.0 out of 5 stars Solid reference book, January 4, 2005

By 

R. Kolakowski (Los Angeles, CA United States) - See all my reviews
(REAL NAME)   

This review is from: Valuation for Mergers, Buyouts, and Restructuring (Wiley Finance) (Hardcover)

This is a solid work on the subject matter of valuations. Although it is definitely academically oriented rather than telling a than a story, it gives great examples (many of them based on real-life deals) of actual real-life applications.

The plethora of examples and solid coverage in the area earns this book a permanent spot on my bookshelf. I believe I'll be referencing it quite often. Also, the included CD has helpful sample deal models at are immediately usable.

On a side note, I find no basis for the 'one-star' review from the 'MBA-student' hoping to gain some insights before an interview at an investment bank. Comparing Arzac's solid work to the reviewer's misleading comments raises questions about the reviewer's competence and/or credibility.