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Article
Publication date: 1 March 1990

Tom Copeland, Tim Roller and Jack Murrin

When the time comes to make a European acquisition or divestiture, you will be relieved to have this step‐by‐step guide to valuing a multinational business on hand. This article…

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Abstract

When the time comes to make a European acquisition or divestiture, you will be relieved to have this step‐by‐step guide to valuing a multinational business on hand. This article, written from the point of view of a finance executive, is adapted from Valuation: Measuring and Managing the Value of Companies.

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Planning Review, vol. 18 no. 3
Type: Research Article
ISSN: 0094-064X

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Article
Publication date: 1 December 2000

Reproduces an exclusive extract from Chapter 22 of the new edition of Copeland, Koller and Murrin’s definitive work Valuation: Measuring and Managing the Value of Companies…

46699

Abstract

Reproduces an exclusive extract from Chapter 22 of the new edition of Copeland, Koller and Murrin’s definitive work Valuation: Measuring and Managing the Value of Companies. Covers the practical techniques to use in the difficult issue of valuing insurance companies, using Trans America as a case study.

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Balance Sheet, vol. 8 no. 6
Type: Research Article
ISSN: 0965-7967

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Article
Publication date: 1 March 1996

Kenneth Lehn and Anil K. Makhija

The increasing frequency with which the business environment demands strategic change elevates the role played by performance measures in assessing alternative business…

2635

Abstract

The increasing frequency with which the business environment demands strategic change elevates the role played by performance measures in assessing alternative business strategies. Traditional accounting measures of performance have long been criticized for their inadequacy in guiding strategic decisions. Two alternative measures of business performance, EVA (eco‐nomic value added) and MVA (market value added) have been attracting much attention of late. According to a recent article in Fortune, EVA is employed by a large number of firms, including Coca‐Cola, AT&T, Quaker Oats, Eli Lilly, Georgia Pacific, and Tenneco. Unlike traditional accounting measures of performance, EVA attempts to measure the value that firms create or destroy by subtracting a capital charge from the returns they generate on invested capital. In addition to their use as performance measures, EVA and MVA are recommended by some as metrics for executive compensation plans and the development of corporate strategies.

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Strategy & Leadership, vol. 24 no. 3
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 1 January 1996

Adrian Buckley

The financial analysis of international investment decisions is complex. The basic methodology which homes in on incremental cash flows needs to be refined in order to focus upon…

269

Abstract

The financial analysis of international investment decisions is complex. The basic methodology which homes in on incremental cash flows needs to be refined in order to focus upon cash flows which are remittable to the parent company, for it is only these that would logically add shareholder value. Build in the complications of two lots of tax and changing exchange rates and the equation looks anything but simple. But there is another complexity too which renders the traditional discounting methodology less than wholly appropriate. And this applies not just to international investment but to any situation where capital is committed with an option to expand or curtail embedded in it. This is not to say that the typical model cannot be adapted to meet the situation. It can and it is not too difficult.

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Managerial Finance, vol. 22 no. 1
Type: Research Article
ISSN: 0307-4358

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Case study
Publication date: 20 January 2017

Robert F. Bruner, Michael J. Innes and William J. Passer

Set in September 1992, this exercise provides teams of students the opportunity to negotiate terms of a merger between AT&T and McCaw Cellular. AT&T, one of the largest U.S…

Abstract

Set in September 1992, this exercise provides teams of students the opportunity to negotiate terms of a merger between AT&T and McCaw Cellular. AT&T, one of the largest U.S. corporations, was the dominant competitor in long-distance telephone communications in the United States. McCaw was the largest competitor in the rapidly growing cellular-telephone communications industry. Prior to the negotiations, AT&T had no position in cellular communications. This case and its companion (F-1143) are designed to allow students to be assigned roles to play. The case may pursue some or all of the following teaching objectives: exercising valuation skills, practicing strategic analysis, exercising bargaining skills, and illustrating practical aspects of mergers and acquisitions.

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Darden Business Publishing Cases, vol. no.
Type: Case Study
ISSN: 2474-7890
Published by: University of Virginia Darden School Foundation

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Article
Publication date: 6 September 2011

Joseph Calandro

This paper seeks to analyze the applicability of the time‐tested margin of safety principle from value investing to corporate strategy.

2780

Abstract

Purpose

This paper seeks to analyze the applicability of the time‐tested margin of safety principle from value investing to corporate strategy.

Design/methodology/approach

The main source of this paper is the book Margin of Safety, supplementation materials, including a discussion with the book's author, Seth Klarman, were also referenced.

Findings

The paper finds that the margin of safety principle is broadly applicable to corporate strategy in areas such as M&A, hedging, balance sheet management, share buybacks, special dividends, divestments, and cash management. Each of these areas is discussed in the paper and illustrated by way of timely examples as part of the analysis.

Research limitations/implications

Further research could be conducted into valuation methods in general, including the method practiced by noted value investors. Research could also be conducted into the margin of safety principle and its applications in corporate strategy, corporate finance, strategic risk management, shareholder communications, and operations management.

Originality/value

This is the first paper that the author is aware of that analyzes the applicability of the investment‐based margin of safety principle to corporate strategy and strategy‐related initiatives.

Details

Strategy & Leadership, vol. 39 no. 5
Type: Research Article
ISSN: 1087-8572

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Case study
Publication date: 20 January 2017

Robert F. Bruner and Sean Carr

Set in May 2000, these cases reflect the separate perspectives of the CEOs as they approach the negotiations of TSE International to acquire Yeats Valves. The task for the student…

Abstract

Set in May 2000, these cases reflect the separate perspectives of the CEOs as they approach the negotiations of TSE International to acquire Yeats Valves. The task for the student is to complete a valuation analysis of the target and buyer, and to negotiate a price and exchange ratio with the counterparty. Each case contains a financial forecast only for that side; therefore, an important element in the negotiation is to obtain the private information of the other side, analyze it, and successfully negotiate terms of acquisition. The cases are relatively simple, and are offered as a first exercise in the valuation of the firm, and negotiation of an acquisition. They may be taught singly in usual case-discussion fashion, or combined into a joint-negotiation exercise where students are assigned parts to play. Used in a bilateral bargaining exercise, two teams of students are designated, each team representing one side of the negotiation and receiving a case designed for that team. The bargaining exercise provides a particular opportunity for joint teaching among instructors in finance, strategy, human behavior, and negotiation.

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Darden Business Publishing Cases, vol. no.
Type: Case Study
ISSN: 2474-7890
Published by: University of Virginia Darden School Foundation

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Article
Publication date: 20 July 2015

Joseph Calandro, Jr.

The purpose of this paper is to profile how ample cash holdings can serve as a competitive advantage by first mitigating the risk of becoming a forced seller during times of…

739

Abstract

Purpose

The purpose of this paper is to profile how ample cash holdings can serve as a competitive advantage by first mitigating the risk of becoming a forced seller during times of distress, and then positioning a firm to take strategic advantage of forced selling and other forms of distress-generated opportunities.

Design/methodology/approach

The author reviews the changing role of cash over time in corporate strategy, and how inadequate cash has caused or contributed to corporate failures.

Findings

The findings of this paper, which are supported by historical and contemporary examples, are that ample cash reserves can be a powerful source of comparative advantage.

Practical implications

This article supports earlier work published in Strategy & Leadership that shows how Graham-and-Dodd-based analysis is a viable avenue of academic research and a viable method with which to assess and formulate corporate strategic initiatives such as mergers and acquisitions, share buy-backs, risk management and, in this case, the strategic uses of cash.

Originality/value

This paper offers leaders and financial executives a practical explanation of how ample cash holdings can serve as a competitive advantage.

Details

Strategy & Leadership, vol. 43 no. 4
Type: Research Article
ISSN: 1087-8572

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Case study
Publication date: 20 January 2017

Robert F. Bruner, Robert E. Spekman, Petra Christmann, Brian Kannry and Melinda Davies

This case may be taught singly or used as a merger-negotiation exercise with “Chrysler Corporation: Negotiations between Daimler and Chrysler” (UVA-F-1240). Set in February 1998…

Abstract

This case may be taught singly or used as a merger-negotiation exercise with “Chrysler Corporation: Negotiations between Daimler and Chrysler” (UVA-F-1240). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.

Details

Darden Business Publishing Cases, vol. no.
Type: Case Study
ISSN: 2474-7890
Published by: University of Virginia Darden School Foundation

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Case study
Publication date: 20 January 2017

Michael J. Schill

Set in May 2008, this case reflects the separate perspectives of chief executive officers Tom Eliot and Bill Flinder as they approach the negotiations of RSE International…

Abstract

Set in May 2008, this case reflects the separate perspectives of chief executive officers Tom Eliot and Bill Flinder as they approach the negotiations of RSE International Corporation to acquire Flinder Valves and Controls Inc. The task for the student is to complete a valuation analysis of the target and buyer and to negotiate a price and exchange ratio with the counterparty. The intent of the case design is for students to be organized into teams and assigned to play the part of either Flinder Valves or RSE International in the negotiation. The case provides supplementary private information for each side of the transaction. Therefore, a unique element of the case is negotiating the terms of acquisition in an environment of asymmetric information. The case is relatively simple and provides a first exercise in the negotiation of an acquisition. It could also be taught in the usual case-discussion fashion instead of the intended joint-negotiation exercise.

Details

Darden Business Publishing Cases, vol. no.
Type: Case Study
ISSN: 2474-7890
Published by: University of Virginia Darden School Foundation

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