Company Valuation and Takeover

Over the past decade, global capital markets have experienced one of the most volatile periods in their entire history. For example, since the millennium, the index of Britain’s highest valued companies, the FT-SE 100 (Footsie) has often moved up and down by more than 100 points in a single day, driven by the extreme price fluctuation of risky internet or technology shares, the changing value of blue-chip companies, a global banking and Euro financial crisis, rising oil and commodity prices, all underpinned by increasing geo-political instability.

Leading up to the millennium during the dot.com boom, many I.T. firms never turned a profit, let alone a dividend. Yet, even without yield, cover, or P/E ratios to compare one company with another and its peer group, their share prices soared, fuelled by speculation. Many traditional companies suffered from this tyranny of fashion. Despite creditable financial performance, their values plummeted as investors moved sectors. In March 2000 a radical shakeout of the FT-SE 100 occurred.

• Part One: A Guide to Stock Market Investment
• Strategies for Investment (I) 

1. Introduction
2. Dividends as Income
3. Dividends for Growth
4. The Price-Earnings Ratio: Past and Future
5. Summary and Conclusions
6. Selected References

• Strategies for Investment (II)

1. Introduction
2. Corporate Information
3. “Beating” the Market
4. Summary and Conclusions
5. Selected References

• Part Two: Valuation and Takeover
• A Stock Exchange Valuation

1. Introduction
2. Coming to the Market
3. Calculations and Assumptions
4. A Total Market Valuation
5. An Aggregate Flotation Value
6. The Number and Denomination of Shares
7. A Valuation per Share
8. Summary and Conclusions

• Managerial Motivation and Corporate Takeover

1. Introduction
2. Objective Motivational Factors
3. Subjective Motivational Factors
4. Summary and Conclusions
5. Selected References

• Acquisition Pricing and Accounting Data

1. Introduction
2. Takeover Valuation: The Case for Net Assets
3. Valuing the Assets
4. How to Value Goodwill
5. Summary and Conclusions
6. Selected References

• Acquisition Pricing: Profitability, Dividend Policy and Cash Flow

1. Introduction
2. Takeover Valuation: The Profitability Basis
3. Takeover Valuation: Dividend Policy
4. Takeover Valuation: The Cash Flow Basis
5. Summary and Conclusions
6. Selected References

• Takeover Activity, Investor Behaviour and Stock Market Data

1. Introduction
2. The Current Takeover Scene
3. Investor Behaviour
4. The “Golden Rules” of Investment
5. Acquisition Strategy and Stock Market Data
6. Summary and Conclusions

• Selected References
• Appendix: Stock Market Ratios