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

Book Description
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.

Book Info
Text presents a comprehensive approach to corporate valuation. Provides detailed coverage of the valuation of mergers, acquisitions, and leveraged buyouts; and the assessment of asset restructuring options and recapitalization plans. Reference for professionals involved in transaction valuation. DLC: Corporations--Valuation--Textbooks.

From the Publisher
“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

From the Inside Flap
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.

Keep up-to-date with the latest thinking on valuation for mergers and acquisitions
Enrique Arzac applies the latest academic thinking to mergers, buyouts, and restructuring, and blends it with his own practical approach to valuation developed over years of consulting.

Apply practical valuation procedures to a variety of situations
You’ll learn how to value stand-alone companies and business units, merged firms, foreign firms in developed or emerging markets, troubled-company restructuring, and more.

Learn how to use expert analysis tools
The book provides the essential analysis tools for estimating the cost of capital for public and private companies, performing discounted cash flow valuation, estimating and applying valuation multiples, estimating sustainable debt, and much more.

Save time modeling transactions with professional-grade software
The CD included with this book contains DealModeler and Valuation Aids software. DealModeler is integrated modeling software for preparing pro-forma financial statements and valuing mergers, acquisitions, and leveraged buyouts, similar to those used by investment bankers and appraisal professionals. Valuation Aids software is designed to help you perform specialized computations, such as estimating the equity premium and valuing financial and real options.

From the Back Cover
Praise for Valuation for Mergers, Buyouts, and Restructuring

“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 inc orporating 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.

About the Author
Enrique R. Arzac is Professor of Finance and Economics at the Columbia University Graduate School of Business, Director of the Merger, Buyouts, and Restructuring program for executives at Columbia Business School, and Co-Director of the Merger and Acquisitions program for executives at London Business School. He is the author of many academic articles in financial economics and has been consultant to corporations and financial institutions in North and South America and Europe. He is a director of the Adams Express Company, Petroleum and Resources Corporation and Credit Suisse Asset Management funds.

FROM THE PUBLISHER

“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

SYNOPSIS

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.

Keep up-to-date with the latest thinking on valuation for mergers and acquisitions
Enrique Arzac applies the latest academic thinking to mergers, buyouts, and restructuring, and blends it with his own practical approach to valuation developed over years of consulting.

Apply practical valuation procedures to a variety of situations
You’ll learn how to value stand-alone companies and business units, merged firms, foreign firms in developed or emerging markets, troubled-company restructuring, and more.

Learn how to use expert analysis tools
The book provides the essential analysis tools for estimating the cost of capital for public and private companies, performing discounted cash flow valuation, estimating and applying valuation multiples, estimating sustainable debt, and much more.

Save time modeling transactions with professional-grade software
TheCD included with this book contains DealModeler and Valuation Aids software. DealModeler is integrated modeling software for preparing pro-forma financial statements and valuing mergers, acquisitions, and leveraged buyouts, similar to those used by investment bankers and appraisal professionals. Valuation Aids software is designed to help you perform specialized computations, such as estimating the equity premium and valuing financial and real options.