In the current highly uncertain economic environment, corporate decision making is increasingly difficult. Strategic questions abound.
Should excess cash flows be reinvested in the firm or distributed to shareholders? Does restructuring through a combination of divestitures and spin-offs make sense? Should firms continue to “buy” growth through M&As and run the risk of overpaying, making achieving required shareholder returns more challenging?
Should corporate executives stay with what they know or diversify? Should firms downsize their operations to better focus on markets in which their core competencies give them a competitive advantage? These are important questions with no easy answers, that accountants are roped into answering every single day.
While this webinar, and the rest of the webinars in this series, does not promise quick answers to these demanding questions, it does offer insight into all aspects of the corporate restructuring process from takeovers and joint ventures to divestitures and spin-offs and equity carve-outs and reorganizing businesses.
In this webinar alternatives to DCF techniques are discussed, including relative valuation, asset-oriented, and replacement cost methods. Implicit in the DCF approach to valuation is that management has no flexibility once an investment decision has been made. In practice, management may decide to accelerate, delay, or abandon investments as new information becomes available. This decision-making flexibility may be reflected in the value of the target firm by adjusting DCFs for the value of so-called real options.