Valuation+of+a+P+and+C+Company(排版很好的PPT).ppt

ValuationofaP CCompany PresentedatCASSpringMeeting June16 2008 QuebecCity SeanC Martin CFAVicePresidentFinancialInstitutionsGroupInvestmentBankingTDSecurities Inc 2 AcquisitionValuationProcessofaP CInsurer Withcontentfrom AcquisitionValuationofP CInsuranceCompanies JaroslavDanhel PeterSosik UniversityofEconomicsinPrague StrategicAnalysis Actuarial FinancialAnalysis ProductDiversificationGeographicalExpansionBroadenDistributionPricingPowerwithScale SynergiesProFormaGrowthUnderwritingResultsLeverageTax ValuationModel Output ReconsiderationofStrategicAssumptions ThevaluationofaP Ccompanyisoftenaniterativeprocess 3 InputstoValuationProcess 4 ValuationMethods BookValueApproachValue valueofassets valueofliabilitiesAccountingfocusedRetrospectiveFuturevalueofbusinessnotconsidered StockMarketApproachValue ofsharesXsharepriceEfficientmarkethypothesisNocontrolpremiumFuturevalueofbusinessmaynotbeconsidered DiscountedCashFlowApproach DCF Value ValuationoffutureprofitSensitivetoassumptionsValidateothermethods T t 1 CFt 1 r t Withcontentfrom AcquisitionValuationofP CInsuranceCompanies JaroslavDanhel PeterSosik UniversityofEconomicsinPrague 5 ValuationMethods cont d RelativeValuationComparisontopricesof PrecedentTransactionsPublicCompanies 6 Valuation FootballField Example PreliminaryValueRange C pershare ComparableCompaniesplusControlPremium PrecedentTransactions ComparableCompanies AnalystTargetPrices 1 52WeekHigh Low HistoricalAverageTradingMultiples 2 Canada U S ImpliedPrice BookValue 22 1 5x 26 1 7x 30 2 0 x 18 1 2x 27 50 20 00 25 00 28 50 27 00 28 00 27 00 Source BloombergandThomson 1 BasedontargetpricesfromfourofthesevencompaniescoveringXYZ 2 RangeisfromaverageP EtoaverageP BVfromJanuary1 2005toJanuary1 2007 28 00 20 00 CurrentPrice 20 00 24 00 23 00 23 00 24 00 25 00 7 ComparableCompanies Example MarketCapitalizationisonadilutedbasisandincludesin the moneyexercisableoptionsoutstanding GAAPEPSisusedforCanadiancompanies OperatingEPSisusedforU Scompaniesandexcludestaxrealizedgainsandlosses BasedonBloombergestimates MultiplesarecalculatedbasedontheclosingpriceadaypriortotheacquisitionannouncementbyLibertyMutual 8 PrecedentTransactions Example Source Bloomberg SDC MSAResearcherandvariousnewsservicesPrice Earningsvaluecalculatedusing1H2007annualizednetincome Price BookvaluebasedonTDNewcrestestimateofadjustedbookvalue 1 4xtransactionmultipleestimatedbyTDNewcrestAnalystDougYoungandcalculatedasapercentofpremiums notbookvalue UnitedStates Canada 9 20 Premium 16 0 xPrice Earnings 1 6xPrice Book50 EquityConsideration 132 5sharesdeliveredtoexistingshareholdersofSellCo 37millionafter taxcostofdebt 30millionafter taxsynergies SimplifiedAcquisitionModel Example Source CompanyreportsandBloombergIBESestimates 10 1 150ofadditionaldebt 34 debt capitalratio 1 325newequityissued equityofSellCo eliminated2 EPSaccretiveafternewsharesissued costofdebtandsynergies SimplifiedAcquisitionModel Example Source CompanyreportsandBloombergIBESestimates CapitalStructure BuyCo SellCo Adjust ProForma Cash 75 100 175 0 TotalAssets 5 400 3 700 0 9 100 Debt 400 200 1 150 1 750 OtherLiabilities 3 000 2 000 0 5 000 Equity 2 000 1 500 175 3 325 TotalAssets Liab 5 400 3 700 10 075 Debt Capital 17 12 34 11 SensitivityanalysishighlightstheimpactonaccretionofkeydealassumptionsAdditionalequityreducesaccretionasadditionalsharesareissuedCostofequityisgreaterthanthecostofdebtSellCo acquiredataP EratiogreaterthanBuyCo SimplifiedAcquisitionModel Example Source CompanyreportsandBloombergIBESestimates 12 ExcesscapitalofBuyerandSellercanbeusedtofundtransactionTheoptimallycapitalizedportionoftheSellCo businessisvaluedatafullacquisitionmultipleExcessCapitalmaynotbevaluedatafullprice bookmultiple SimplifiedAcquisitionModel Example Source CompanyreportsandBloombergIBESestimates 13 ActuariesareanintegralpartofaP Cvaluationprocessbyprovidingforecastsforlossratios payoutpatterns reservedevelopment andpremiumgrowthThevaluationofaP Ccompanyisoftenaniterativeprocesswheretheforecastsprovidedbyactuariescanreflectthebiasesoftheacquiringcompanyforexample apurchasermayhaveapessimisticviewonprojectedlossratiosActuariescanprovidevaluetoallaspectsofatransactionwhentheyareawareofthestrategicobjectivesoftheirclient whilemaintaininganobjectiveviewpoint Itisimportantforalldealteammemberstohaveanunderstandingofthefinancialmodelandhowtheiranalysisisbeingin