Syllabus C2/3. Valuation For Acquisitions And Mergers & Regulatory Framework ^{2 / 3}

C2
a) Discuss the problem of overvaluation.

b) Estimate the potential near-term and continuing growth levels of a corporation’s earnings using both internal and external measures.

c) Discuss, assess and advise on the value created from an acquisition or merger of both quoted and unquoted entities using models such as:
i) ’Book value-plus’ models
ii) Market based models
iii) Cash flow models, including free cash flows.
Taking into account the changes in the risk profile and risk exposure of the acquirer and the target entities

d) Apply appropriate methods, such as: risk- adjusted cost of capital, adjusted net present values and changing price-earnings multipliers resulting from the acquisition or merger, to the valuation process where appropriate.

e) Demonstrate an understanding of the procedure for valuing high growth start-ups.


C3
a) Demonstrate an understanding of the principal factors influencing the development of the regulatory framework for mergers and acquisitions globally and, in particular, be able to compare and contrast the shareholder versus the stakeholder models of regulation.

b) Identify the main regulatory issues which are likely to arise in the context of a given offer and
i) assess whether the offer is likely to be in the shareholders’ best interests
ii) advise the directors of a target entity on the most appropriate defence if a specific offer is to be treated as hostile.