10 Oct 2017
Business Valuation Methods: Five Steps to Establish Your Business Worth

by veristrat

Business Valuation is the key to determining the value or worth of a business. In this fast-changing economic climate, every business needs to have an up-to-date business valuation on hand at all times. Even if your business was valued only a year ago, it probably won’t have the same value today as business values go up and down. Therefore, it has become imperative to keep a close track of business ‘value.

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19 Sep 2017
Private Equity Industry Performance Analysis -2016

by veristrat

Private equity is an alternative investment asset class, a source of investment capital from high net worth individuals and institutions for the purpose of investing and acquiring equity ownership in companies. General partners in private equity firms raise capital and manage funds to yield favorable returns for their clients, typically with an investment horizon between four and seven years. Private funds are formed by combining funds from limited partners including institutional investors- high-net-worth individuals, insurance companies, pension funds etc. The fee structure for private equity firms typically consists of a management fee and a performance fee.

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16 Aug 2017
The Winner’s Curse

by veristrat

When prospective acquirers evaluate an acquisition, their foremost focus is on the strategic logic of proposed combinations and on the potential social and regulatory consequences.Beyond the strategic logic, acquirers also study deeply into the valuation gains arising from a combination.

How much can an acquirer pay for an asset while still creating value for its shareholders?
What price is likely to persuade the acquisition partner to agree to a transaction?

The transaction price that is settled between the two parties depends largely on the synergies created from the combination.

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17 Jul 2017
Why invest in large caps?

by veristrat

In hindsight of Brexit referendum and US presidential elections, investors in US have invested most of their funds in large companies in order to safeguard their investments. Investors generally look for a safer investment strategy that could beat the volatility outbreaks at the time of uncertainties. Money managers also advise investors to stick to large cap stocks and reduce exposure to mid and small cap stocks in the days of unstable macroeconomic and political environment. The chart below shows the impact of US elections and Brexit referendum on different indexes around the end of 2016.

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10 Jul 2017
Working Capital Management

by veristrat

The term working capital tells us about the quantum of fund required to maintain day-to-day expenditure on operational activities of a business enterprise.
1. Working Capital can be termed as lifeblood of a business, while its improper usage can lead not only to loss of profits but also lead to the ultimate down fall of a concern.
2. The Working capital management if used effectively and consistently, will assure the health of an organization good or can never be short of funds.

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22 Jun 2016
Importance Of Book Value

by veristrat

Investing requires a lot of discipline and meticulous research work before committing capital to a specific project as returns are never guaranteed. Selection of stocks by individual investors can be a daunting task whereby evaluating securities could be the tricky part. Often investors are caught in a web of information whereby sieving the relevant information and interpreting them is a tedious task. Hence, investors need to look at various parameters to assess a securities worth whereby evaluation of financial parameters holds a critical place.

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08 Jun 2016
Synergy- Value or Myth

by veristrat

Economies of scale have always been at the forefront of the goals of an organization and in today’s cut throat competition, organizations are going all out to over par competitors. It is not unusual for a company to pursue merger or acquisition as a growth strategy. Most of the M&A transactions are justified by the value of synergy created. In this article we will discuss the concept of synergy, benefits, factors affecting pricing with a conclusion that synergy calculated is seldom delivered in acquisition due to lack of planning, lack of management foresight and the inability to overcome practical challenges.

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27 May 2016
What is a 409A Valuation and Do I need it.

by veristrat

Startups are not cash rich, but employee salary expense is something that needs to be incurred every month. Most of the startup firms in order to circumvent this expense and at the same time reward their employees give them stock options and stock appreciation rights (SARs), these two common forms of incentive compensation for private companies are potentially within the scope of Section 409A code.

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17 May 2016
What is Equity Value and Enterprise Value?

by veristrat

Equity value and enterprise value are two common ways that a business may be evaluated from a marketing and sales standpoint. The both value may be used in business valuation or sale of a business, however each offers a different view. While equity value offers a snapshot of current and potential future value, the enterprise value provides an accurate calculation of the overall current value of a business which is similar to balance sheet.

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10 May 2016
Importance Of Compounding In Valuation

by veristrat

Power of Compounding :
Investing is the act of committing money or capital to an endeavor with the expectation of obtaining an additional profit. For any investor, assessment of fair value of a security is of paramount importance before investing to assess the real worth of their investment because what one pays is price and what is received is value. Hence, one needs to assess the valuation/ fair value of the security and is also required to estimate its future potential for value creation (compounding).

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