Day 92 in MIT Sloan Fellows Class 2023, Financial Management 9, Summary of business cases and financial theories - 4

1. Dixons
   1. Key concepts
      1. Valuation Models
         1. Earning multiples
            1. P/E
            2. Vf/EBIT
            3. Vf/EBITDA
         2. Asset multiples
            1. BV
            2. NetWorth
            3. Liquidation Value
            4. MV/BV
         3. DCF
            1. FCFf@WACC
            2. FCFe@Re
            3. APV - equity firm + value of debt tax shields
            4. EVA - Economic Value added
         4. Comparables
            1. Other multiple metrics
         5. Real Options
   2. key findings
      1. In modeling, debt ratio would be 
         1. project based
         2. comparables
         3. parent company
      2. Typical assumptions
         1. Where data comes from
         2. Growth rate in pro farma
         3. Main factors for FCF - CAPEx, Dep, NWC
         4. Other ratios
2. Concoleum
   1. Key concepts
      1. LBO
         1. Go private
         2. Use assets to borrow against finance purchase of equity
         3. High leverage needs stable cash flows
         4. High depreciation and interest payment mean high tax shield
         5. High management incentives. LBO significantly reduce agency costs because management now is owner.
         6. Do IPO again when it loses depreciation and interest ta sheild. 
      2. Strip finance vs Tiered Finance
         1. Strip finance is to get equity actually, but call it "debt". 
         2. No conflict among priority claim holders
         3. With this finance, the market allows future mega deals.
         4. Lower interest rate and real debt is lower percentage, but it seems to be very high leverage.
   2. Key Findings
      1. Target company profile
         1. Some future certain risk such as patent expiration
         2. Low P/E
         3. Excess cash
         4. Low product market risk by low entry barrier and high liquidity (different from AT&T)
      2. How to exchange cash?
         1. Old company's stock(only one division)
         2. Remaining assets
         3. Stock options
      3. All the cash was paid as payment of new Congoleum. Difference between the cash received by old Congoleum is fee for investment bank.

      4. Financing