The Successful Business Acquisition Process – Steps #10– Letter of intent and formal due diligence & #11-Valuing and pricing the company

Letter of intent and formal due diligence

This chapter introduces some of the basic concepts of valuation of the company.  Although four basic approaches, the profitability method, the asset method, historic cash flow and discounted cash flow, are all described, the discounted cash flow method is considered the most accurate valuation of the company.  However, a comparison of values from different methods can provide useful insights, especially in the early stages of valuation of the business.

This chapter also points out the distinction between value and price.  The value is the worth of the company as will be operated by the buyer. The price is the amount you wish to pay for it.  The synergy you can realize from the sale, the motivation of the seller, and the projected growth of the industry, and the type of financing are just a few of the factors you might consider in negotiating the final price. Continue reading The Successful Business Acquisition Process – Steps #10– Letter of intent and formal due diligence & #11-Valuing and pricing the company

Goldman Versus the SEC

Finance Professor Nejat Seyhun had the following interview with the University of Michigan News and Media’s Terry Kosdrosky. With his permission we also present the interview. (http://bit.ly/aKqf39).

In the biggest shot at Wall Street since the 2008 financial crisis, the U.S. Securities and Exchange Commission (SEC) has accused banking giant Goldman Sachs Group Inc. of fraud over a financial product tied to sub-prime mortgages. The SEC, in a civil complaint, alleges Goldman didn’t tell investors that Paulson & Co., a hedge fund betting against sub-prime, helped select the pool of mortgages in a synthetic collateralized debt obligation. Goldman says it did nothing illegal. Professor Seyhun says the reputations of both Goldman Sachs and the SEC hinge on the outcome. The problem for both is that neither side has an open-and-shut case. Seyhun, the Jerome B. and Eilene M. York Professor of Business Administration, thinks the SEC’s move and the way it was announced make it clear the Obama administration is serious about financial regulation. Continue reading Goldman Versus the SEC

Sustainability of Organizations

Yannis A. Phillis is a guest  contributor. He is Professor of Engineering at UCLA and the Technology University of Crete.

The following is adopted from:
“Fuzzy Measurement of Sustainability,”  by
Y. A. Phillis and V. S. Kouikoglou, Nova Publishers, NY, 2009, by permission.

An organization is an entity or purposeful structure with boundaries that separate it from its environment. According to Webster’s dictionary it is an administrative and functional structure (as a business or a political party). An organization pursues certain goals such as education (this is a university) or production of goods and services if it is a corporation. Organizations interact with their environment, physical, biological and social, they affect it and become affected by it. It is quite natural then that organizations play an important role in the sustainability of a region or country. Continue reading Sustainability of Organizations

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