Investment Banking

Total Page:16

File Type:pdf, Size:1020Kb

Investment Banking NIRMA UNIVERSITY Institute of Management Master of Business Administration (Full Time) Programme/ Integrated Bachelor of Business Administration-Master of Business Administration Programme/ Master of Business Administration (Family Business & Entrepreneurship) Programme L T PW C 3 - - 3 Course Code MFT5SEEF17 MBM5SEEF17 MFB5SEEF18 Course Title Investment Banking Course Learning Outcomes (CLO): At the end of the course, students will be able to: 1. Interpret the managing aspects and regulations affecting of Investment Banks. 2. Develop appropriate instruments keeping in view the terms of issue of security. 3. Assess the valuation aspect and issue of various kind securities. 4. Plan the restructuring including capital restructuring of a company. Syllabus Teaching Hours Unit I: Overview of Investment Banking 04 • Basic Concepts and Definitions • Role of Investment Banking as Financial Intermediaries • Business of Investment Banking • American and Indian Investment Banks Unit II: Domestic Issue Management 06 • Dynamics of primary market • Listing requirements and procedure • Raising funds through IPO • Methods of bringing out an IPO, and IPO Pricing • Due diligence process Unit III: Restructuring, Underwriting and Ancillary Services 09 • Structured products and risk management advisory • Financial Restructuring Services • Corporate Debt Restructuring (CDR) • Underwriting Services, Business Model of Underwriting, Underwriting Commissions, Devolvement and Green Shoe Option • Issuing ADR, GDR and IDRs • Arranging for Buyback and Delisting of Shares Unit IV: Investment Banking and Business Valuation 07 • Various valuation models applied in estimating value of the firm and value of equity • Merits and Limitations of each models/methods of valuation • Valuing Private Equity and Venture Finance Unit V: Issues facing Investment Banks 04 • Designing new financial instruments • Adoption of Blockchain in Investment Banks • Data Security • Other Issues Suggested Readings: 1. Giri, P.S, Investment Banking – Concepts, Analyses and Cases. McGraw Hill 2. Stowell, D. P., Investment banks, hedge funds, and private equity. Academic Press. 3. ICFAI Press. Investment Banking and Financial Services. w.e.f. Academic Year 2019-20 and onwards .
Recommended publications
  • Business Valuation Courses
    The specialist in highly technical, market-driven bankingmergers and corporate & acquisitions finance trainingtraining BusinessMergers & ValuationAcquisitions Courses Courses web: redliffetraining.co.uk email: [email protected] phone: +44 (0)20 7387 4484 Advanced Negotiation Issues in M&A Date: BrochureLocation: London Content Standard Price: £*** + VAT Membership Price: £*** + VAT BOOK NOW PUBLIC COURSES Course Overview • Advanced Equity Valuation • Advanced Negotiation Issues in Financial Covenants • Advanced Negotiation Issues in M&A • Advanced Private Equity & Leverage Buy-Outs: A 5 Day Masterclass • Advanced Private Equity & LBOs Training • Advanced Takeover Code - Current Strategies & Tactics • Bank Valuation • Corporate Finance Masterclass • Corporate Finance Transactions • Equity & Debt Capital Markets • Effective Business Writing for Corporate Finance • European Term Loan “B” • How to Buy A Business • How to Sell A Business • Introduction to The Takeover Code • Joint Ventures - Key Negotiating and Structuring Issues Coursewith Content Sample Documents • Leveraged Loans in Private Equity and Corporate Transactions • Negotiating Heads of Terms (LOI/MOU) & Related Issues To book this course or find out more, please click the “Book” button Advanced Negotiation Issues in M&A Date: BrochureLocation: London Content Standard Price: £*** + VAT Membership Price: £*** + VAT BOOK NOW PUBLIC COURSES Course Overview • Tax Issues in M&A • The M&A Course • Modelling for M&A Course • Private Equity & MBO • The SPA Course - Commercial
    [Show full text]
  • Fundamentals of Corporate Valuation
    Fundamentals of Corporate Valuation Debt free cash free company valuations: what are they? Imagine a typical company which has some amount of net debt (where net debt equals debt less cash that could be applied to refinancing that debt). Imagine too that those net liabilities could magically be removed, perhaps by a magnificent benefactor or a fairy godmother – someone who could work a wonder over the company and take away its net debt. Without those net liabilities, magically the company’s value would increase. That’s the debt free cash free valuation: the value of the company imagining it had no net debt. Shares/ equity valuation vs. debt free cash free How does debt free cash free valuation compare to shares or equity value? Let’s imagine a company that has shares/ equity with a valuation of 70 million. You can see that 70 million on the right hand side of the chart below. Let’s imagine that same company had debt less cash (= net debt) of 30 million. The debt free cash free valuation would be 100 million. That’s the value on the left hand side. Equity valuation vs. DFCF 1 Equity valuations are usually higher than DFCF values For a company that has net debt (that is, where debt is greater than cash) the debt free cash free value is higher than the shares/ equity valuation for the business. You can see that in the chart above: the 100 million on the left is higher than the 70 million on the right. Working from left to right, if the owner of a company had received a debt free cash free offer of 100 million, and if net debt was 30 million, the owner would expect to receive 70 million for the shares/ equity in the business.
    [Show full text]
  • PSU Disinvestment Valuation Guidelines
    Valuation Methodology CONTENTS CHAPTER I Introduction CHAPTER II Disinvestment Commission's Recommendations CHAPTER III Valuation Methodologies being followed Standardizing the valuation approach & CHAPTER IV methodologies CHAPTER - 1 Introduction 1.1 In any sale process, the sale will materialize only when the seller is satisfied that the price given by the buyer is not less than the value of the object being sold. Determination of that threshold amount, which the seller considers adequate, therefore, is the first pre-requisite for conducting any sale. This threshold amount is called the Reserve Price. Thus Reserve Price is the threshold amount below which the seller generally perceives any offer or bid inadequate. Reserve Price in case of sale of a company is determined by carrying out valuation of the company. In companies which are listed on the Stock Exchanges, market price of the shares serves as a good benchmark for assessing the fair value of the company, though the market price is usually characterized with significant short-term variance due to investor sentiments being influenced by short-term events and environmental aspects. More importantly, most of the PSUs are either not listed on the Stock Exchanges or command extremely limited traded float. They are, therefore, not correctly valued. Thus, deciding the worth of a PSU is indeed a challenging task. 1.2 Another point worth mentioning is that valuation of a PSU is different from establishing the price for which it can be sold. Experts are of the opinion that valuation must be differentiated from price. While the fair value of an asset is based on the assessment of intrinsic value accruing from fundamentals on a stand-alone basis, varying return expectation and underlying strategic aspects for different bidders could influence the price.
    [Show full text]
  • Determining the Value of a Business
    Determining the Value of a Business August 15, 2017 @ 11 a.m. Eastern For technical assistance, contact the AT&T Helpdesk at 888-796-6118 - Thank you! We would like to thank Neal for his time and providing information regarding his experience on SBA lending programs from his perspective. All opinions, conclusions, and/or recommendations expressed herein are those of the presenter and do not necessarily reflect the views of the SBA. Advanced Business Acquisition / Appraisal Topics Presented by: Neal Patel, CBA, CVA Neal Patel, CBA, CVA Neal Patel, CBA, CVA is the Principal of Reliant Business Valuation, a business valuation and equipment appraisal firm specialized in SBA related valuations nationwide. Our firm currently works with over 150 SBA lenders around the nation. Certified Business Appraiser through the Institute of Business Appraisers (IBA) (Chair of the Board of Governors) Certified Valuation Analyst through the National Association of Certified Valuators and Analysts (NACVA). SBA/Structure Valuation Related Related Intangible Assets Cash Flow Analysis: Liquor Store Partner Buyouts Valuation Methods Stock vs. Asset Valuation Rules of Sales Thumb Other SBA Rules Price / Revenues When is a Third Party Appraisal Required? (Non Special Purpose Property) If the amount being financed (including any 7(a), 504, seller or other financing) minus the appraised value of real estate and/or equipment is greater than $250,000, or.. Note: no mention of goodwill! If there is a close relationship between the buyer and seller (for example, transactions between family members or business partners), or.. Note: employee / employer also included! If the lender’s internal policies and procedures require an independent business appraisal from a qualified source Note: every change of ownership loan requires a business appraisal ! Intangible Assets: SOP Definition SOP 50 10 5(I) pg.
    [Show full text]
  • SBA Procedural Notice
    SBA Procedural Notice TO: All SBA Employees and 7(a) Lenders CONTROL NO.: 5000-808534 SUBJECT: Second Extension of Notice Providing EFFECTIVE: April 14, 2021 Guidance on Underwriting 7(a) Loans during the COVID-19 Pandemic and Miscellaneous Related Matters On December 16, 2020, SBA issued SBA Procedural Notice 5000-20071,Updated Guidance on Underwriting 7(a) Loans (including Community Advantage (CA) Pilot Program loans) during the COVID-19 Pandemic and Miscellaneous Related Matters, extending through March 31, 2021 the guidance on the additional credit analysis that a 7(a) Lender should conduct and include in its credit memorandum during the COVID-19 emergency previously provided in SBA Procedural Notice 5000-20042, and extending through March 31, 2021 the guidance for certain miscellaneous matters related to 7(a) loans during the COVID-19 emergency as discussed in SBA Procedural Notice 5000-20042. Given the continuing adverse economic effects of the COVID-19 emergency, the purpose of this Notice is to extend and update the underwriting guidance and the guidance on certain miscellaneous related matters through June 30, 2021 and provide additional updates as described below as a result of the enactment of the Economic Aid Act on December 27, 2020. A. Updated Underwriting Criteria for New 7(a) Loans Made During the COVID-19 Emergency: Lenders must analyze each application in a commercially reasonable manner, consistent with prudent lending standards, and must demonstrate that the cash flow of the applicant is the primary source of repayment, not any expected recovery from the liquidation of collateral. Further, SOP 50 10 6, Part 1, Section A, Ch.
    [Show full text]
  • The Process of Valuation – Placing Value on Your Business
    Article: Placing value on your business The process of valuation – Placing value on your business On a regular basis, business owners, investors and experienced bankers look for a simple way to determine business value: a rule of thumb or formula. Hoping to avoid the expense and trouble of hiring a professional valuator, a value formula common to the business type is used; thereby assuming determination of a company’s value can’t be complicated. While using a rule of thumb may be a considered alterative in developing a rough test price, it provides a weak form of market comparison for business value; relying solely on this approach poses inherent problems. However, the rule of thumb approach typically employs a multiple of cash flow (or EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization) and/or a multiple of revenues. Business valuation is the act or process of determining value of a business enterprise or ownership interest therein. Valuation of a security interest in a closely held business is a difficult process due to the lack of an active free trading market. Because of the absence of such a market, an underling notion in valuing closely held businesses is found in the investment value principle. The principle suggests the purchase of an equity interest in a closely held business should be viewed like any other investment. In essence, the “investor” not only expects to receive the initial investment back, but also receive a fair return on the investment commensurate to the risk incurred. The investment value principle can be express as a formula, illustrated as follows: Investment Value Principle Benefit Value = Risk Hodges & Hart, LLC Page 1 Certified Public Accountants Article: Placing value on your business Where, Value = the investment value of the business (present value).
    [Show full text]
  • BV201: Introduction to Business Valuation
    BV201: Introduction to Business Valuation BV201: Introduction to Business Valuation: Part 1 Course Hours: 24 Instruction + 3 Exam Hours = Total 27 CPE Credits (see your instructor for further details) Course Outline The American Society of Appraisers wishes to emphasize that these course materials are NOT authoritative. They are intended to be used together with the assigned reading material and the observations of the course instructors as the basis for lectures and discussion in this course. Concepts and valuation methods portrayed in this course are NOT: • The only valuation methods used by competent appraisers or the only concepts considered by competent appraisers; • The only way the individual methods should or could be done; • Cookbook appraisal methods that may be applied to any appraisal. Appraisals must be done with knowledge of the facts and circumstances of the subject company and all other relevant factors. A particular valuation method that is relevant and appropriate for the appraisal of one company at one point in time may or may not be appropriate for another time or another company. v. 4.3 (12/10) Non-authoritative © 2010 American Society of Appraisers i BV201: Introduction to Business Valuation v. 4.3 (12/10) Non-authoritative © 2010 American Society of Appraisers ii BV201: Introduction to Business Valuation Table of Contents CHAPTER 1. INTRODUCTION I. Course Introduction.........................................................................................................1 II. The Business Appraisal Profession .................................................................................2
    [Show full text]
  • Business Valuation Basics for Attorneys
    Journal of Business Valuation and Economic Loss Analysis Volume 1, Issue 1 2006 Article 7 Business Valuation Basics for Attorneys William P. Dukes∗ ∗Texas Tech University Copyright c 2006 The Berkeley Electronic Press. All rights reserved. Business Valuation Basics for Attorneys William P. Dukes Abstract Of all of the businesses in the Nation about .5% could be classified as actively traded, the other 99.5% require special treatment for valuation purposes. A number of the important issues are reviewed, all of which should be understood by all Attorneys who could have clients involved in business valuations. Issues are related to accounting practices, premiums, discounts of various sorts, required return, capitalization rates and proxies for variables not available. Most of the issues are illustrated in a practical valuation. Quantification of a number of the variables is illustrated as well. KEYWORDS: business valuation, income approach, valuation methodologies Dukes: Business Valuation Basics for Attorneys With more than 25 million (IRS - 2003) businesses in the U.S. and something less than 1 percent tradable in any meaningful way, valuation issues are much more important for small/closely held businesses than for large cap stocks, because the World knows about large stocks and can obtain good data on those large firms, especially those actively traded. Consequently, in this paper an effort will be made to identify some of the more important issues and indicate the source of the studies that have been made to help provide a standard method where possible. The difficulty of assessing the “value” of small companies is that some of the variables used in the valuation process for actively traded securities are not available for small/closely-held firms; therefore, proxies for these variables must be used.
    [Show full text]
  • Paper 9.7: Valuations & Business Modelling
    RELEVANT FOR DECEMBER, 2019 SESSION ONWARDS STUDY MATERIAL PROFESSIONAL PROGRAMME VALUATIONS & BUSINESS MODELLING MODULE 3 ELECTIVE PAPER 9.7 i © THE INSTITUTE OF COMPANY SECRETARIES OF INDIA TIMING OF HEADQUARTERS Monday to Friday Office Timings – 9.00 A.M. to 5.30 P.M. Public Dealing Timings Without financial transactions – 9.30 A.M. to 5.00 P.M. With financial transactions – 9.30 A.M. to 4.00 P.M. Phones 011-45341000 Fax 011-24626727 Website www.icsi.edu E-mail [email protected] Laser Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, and Printed at M P Printers/June 2019 ii PROFESSIONAL PROGRAMME VALUATIONS & BUSINESS MODELLING A business valuation provides the management of business with numerous facts and figures pertaining to the actual worth or value of the company in terms of market competition, asset values and income values. The key benefits of business valuation are: Better Knowledge of Company Assets; Understanding of Company Resale Value; Assistance during Merger & Acquisitions; Obtain a True Company Value and Access to More Investors. With the surge in business activities, valuations have occupied the centre stage. Whether it is a start-up or a big corporate house, valuations is pervasive. Right from the setting up of the business entity, during its merger and acquisitions, for obtaining long-term finance from banks / financial institutions, winding-up and for various other business purposes, valuation is an integral component. There are various vital dimensions associated with the valuation- International Valuation Standards; Guidance to Valuation; Methods used in Valuation; Valuation of Tangibles and Intangibles; Valuation during Mergers & Acquisitions etc.
    [Show full text]
  • Pre-IPO Studies
    Valuation Concepts inside: Pre-IPO studies <> Experts debate their use in determining marketability discounts How appraisers value real estate holding entities DCF calculations are only as good as the numbers you provide Prescription for change <> Payment reform, managed care affect how medical practices are valued spring 2005 J.L. PIERSON & CO. LLC BUSINESS VALUATION NYNJCT-BV.COM (203) 325-2703 Business Valuation (203) 434-4648 P.O. BOX 2392 DARIEN CT 06820-0392 Pre-IPO studies Experts debate their use in determining marketability discounts When valuing a company, appraisers commonly apply and tax courts. But they have also come under scrutiny marketability discounts to reflect the difference in and become the target of some criticism. liquidity between shares in closely held businesses vs. publicly traded companies. Support for the method Several firms have analyzed transactions involving The holders of closely held shares lack the ability to sell company shares before and after their IPOs. A Robert their holdings on short notice and, therefore, the shares W. Baird & Co. study analyzed over 1,500 transactions can be less attractive investments. According to the between 1980 and 2000 that occurred five months Valuation Advisors’ Lack of Marketability Discount or nearer the IPO. Another study by Willamette Study, the median discount in 2003 was 40.1% (down Management Associates considered all public offerings from 63.3% four years earlier). listed in Thomson Financial’s IPO Reporter between 1975 and 1993 and analyzed share transactions 36 A contested method months prior to their IPOs. The discounts between private and public transactions vary under different market conditions and can be diffi- cult to calculate.
    [Show full text]
  • Financial Underwriting Tips for the Business Cases
    Advanced CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS Planning Financial Profiles Financial Underwriting Tips for Business Cases HOW TO POSITION YOUR CASE FOR SMOOTH UNDERWRITING Insurance Professionals Can Encounter Two Primary Challenges when Working with Business Owners: Convincing business owners that life insurance can help protect their business and then motivating them to take action. Getting the insurance carrier to issue the amount applied for. Once you get past the first hurdle with a signed application, you have to “make the case” to the underwriter. That’s why packaging the case from a financial underwriting perspective is critical, particularly when large amounts are being requested. Your goal should be to help the underwriter at the life insurance carrier understand the financial basis for the customer’s coverage request. Having everything in order will result in a smoother underwriting process. Use these tips to help you position your case. General Tips and Guidelines for Positioning the Case Have a clear understanding of the parameters that will be applied to a particular business situation. Familiarize yourself with the insurance company’s financial underwriting guidelines before you submit the case. If the requested amount applied for falls outside the guidelines, realize that you will need to provide additional supporting facts to win the case. These facts are outlined in the cover letter. What to Include in a Cover Letter Always submit a cover letter with documentation that addresses all the important and relevant information from the underwriter’s perspective. If your case is for key person coverage and buy-sell funding, there are additional details that you will want to include.
    [Show full text]
  • Business Valuations
    Business Valuations Seminar – August 2017 Compiled by: Achmad Joseph, Yaeesh Yasseen & Rashied Small Business Valuation - Concept Valuation is the process of determining the “economic worth” of an asset or company under certain assumptions and limiting conditions and subject to the data available at the valuation date. [International Valuation Standard Council] Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Valuation is used by financial market participants to determine the price they are willing to pay or receive to affect a sale of a business. Business Valuation - August 2017 2 Business Valuation - Drivers Financial leverage Exit Future strategy performance Business value drivers Financial Asset types expected return Cash flows Business Valuation - August 2017 3 Business Valuation Process Business Valuation - August 2017 4 Business Valuation Process Business Valuation - August 2017 5 Business Valuation – Risk & Return A direct correlation exists between risk and return – the greater the risk the greater is the potential return. However, investments with the highest returns often bears the greatest risk which can lead to financial ruins. The risk an investor is willing to accept to maximize returns will depend on his/her risk appetite and risk tolerance levels. Business Valuation - August 2017 6 Business Valuation – Risk & Return Business Valuation - August 2017 7 Business Valuation – Risk & Return Business Valuation - August 2017 8 Business Valuation
    [Show full text]