Company Comparable Analysis

As the name “Company Comparable Analysis or Comp” implies, its basically comparison of a public company among its peer groups based on certain metrics. Comps involve comparison of operating metrics and evaluation multiples of a publicly traded company among its peer groups. Peer may be grouped based on industry focus, end market, customers or company size. Comps are prepared for applications in Mergers & Acquisition activities, IPO’s (initial public offering), FPO’s (follow on public offering), share repurchase, restructuring etc. It is used by investment bankers to see how the public markets value a company. Preparation of Company Comparable Analysis is the basic task of an investment banker and he uses the operating metrics and the valuation multiples obtained by the preparation of the Company Comparable Analysis to determine an appropriate valuation multiple for the company.

The inputs to the comps are the Consolidated Financial Statements. It involves the complete spread of the Consolidated Balance Sheet or only the EV items (Enterprise Value items include Cash & Cash Equivalents, Short term and Long term Debts, Minority Interest and Shareholder’s Equity) depending on the requirement. Then, Consolidated Statement of Operations or Income is spread completely or till the Operating profit depending on the required multiple. Depreciation & Amortization and Capital Expenditures are taken from the Cash Flow Statement. After preparation, the comp output obtained through the help of FactSet is compared with sources like FactSet, Bloomberg etc to check for sanity of the multiples with the peer group.

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Legendary Wall Street Investment Banker Bruce Wasserstein's Death Triggers $188M Payout

It'll take more than just death to stop legendary Wall Street Investment Banker Bruce Wasserstein from making money. The Lazard chief's death on Wednesday triggered the vesting of $188 million in stock options, swelling a fortune recently estimated at $2.2 billion and cementing his status as one of the highest-paid bankers in history. Wasserstein was ranked 147th on the latest Forbes list of the 400 richest Americans. Wasserstein—known in the financial world as "Bid 'Em Up Bruce"—was paid $20.8 million a year, millions more than the combined salaries of the four most senior Lazard execs beneath him, the Wall Street Journal notes.

Wasserstein had been a fixture on Wall Street since the 1980s. He worked on such landmark deals as Kohlberg Kravis Roberts' takeover of RJR Nabisco, and the Morgan Stanley-Dean Witter and AOL-Time Warner mergers. Aside from his work at Lazard, Wasserstein was chairman of Wasserstein & Co., a private investment firm. It has investments in companies ranging from Penton Media, a publisher of trade magazines, to gourmet food seller Harry & David. Wasserstein also owns New York Media Holdings LLC, which publishes New York magazine.

Bruce Wasserstein

An American Investment Banker and businessman. He was a graduate of the McBurney School, University of Michigan, Harvard Business School, and Harvard Law School, and spent a year at Cambridge University.

Wasserstein helped broker more than a thousand transactions worth $250 billion since the 1980s. Starting his career as a Cravath, Swaine & Moore attorney, he later rose to co-head of First Boston Corp.'s dominant merger and acquisition practice. He eventually formed investment bank boutique Wasserstein Perella & Co., which he sold in 2000, at the top of the 1990s bull market, to Germany's Dresdner Bank for around $1.4 billion in stock. He left the unit Dresdner Kleinwort Wasserstein to take the job at Lazard Frères. In 2005, he completed the initial public offering for Lazard.

Wasserstein controlled Wasserstein & Co., a private equity firm with investments in a number of industries, particularly media. In 2004, he added New York Magazine to his media empire. In July 2007, he sold American Lawyer Media to Incisive Media for about $630 million in cash. He is credited with the term, Pac-Man defense, which is used by targeted companies during a hostile takeover attempt.

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BofA Doles Out $4bn in Bonuses

Bank of America will pay a total of $4 billion to its traders and investment bankers for their work in 2009 or something between $300,000 and $500,000 per employee. That means those responsible for the bank’s $23 billion haul in those sectors will receive about 19% of the profit. Roughly 25% of the payout will be in cash, with the rest in deferred restricted stock or cash depending on the bank’s future performance.

 Any deferred compensation in cash will be dispersed over 3 years, while stock will be awarded over 18 months, with the first segment available for sale in August. Also, the CEO Brian Moynihan's 2010 base salary will be $950,000 up from $800,000.

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Bonds??

Bonds are debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities and states to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.

The indebted entity (issuer) issues a bond that states the interest rate (coupon) that will be paid when the loaned funds (bond principal) are to be returned (maturity date). Interest on bonds is usually paid every six months (semi-annually). One of the common bonds we come across is convertible bond. It’s a bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder. 

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Sanofi-Aventis in a desperate attempt to acquire Genzyme in one of the biggest Healthcare deals!!

US based biotech company Genzyme Inc. has rejected an $18.5 billion or $69 a share buyout offer from French drugmaker Sanofi-Aventis SA setting the stage for a protracted and potentially hostile takeover battle. Sanofi wants to buy Genzyme, a leading maker of drugs for rare diseases, to fuel growth as some of its key treatments lose patent protection. Sanofi shares have lost almost 18 percent this year, while the European healthcare sector is up 3 percent.

After more than a month of unconfirmed, low-level contacts between the sides, Sanofi went public with its $69 per share non-binding cash offer for Genzyme on Sunday, August 29, 2010. Genzyme shares rose 3.5 percent to $69.99 on the Nasdaq. Sanofi shares closed up 0.7 percent at 45.56 euros, in line with the Stoxx 600 European health care index. For the acquisition to proceed any further Sanofi has to increase the offer price in the range of $74 to $77 a share or $22.5 billion, as reported  by analysts at Citigroup.

Check out the space for more updates on this deal with detail financial analysis for each of the above company…...

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Pick up in M & A activities amidst bidding wars…

The recent burst in deal making considered to be the busiest in over a decade could herald a wider rebound in Mergers & Acquisitions for the remainder of the year as low interest rates, record cash piles and low stock-market values have encourage chief executives to strike deals.

Previously deal-starved bankers and lawyers have canceled holiday plans and worked through vacations in August, as companies had the gusto to start hostile bids or fight over target companies.

Deals and offers during the typically slow month of August surged to $262 billion worldwide and is said to be the highest value of deals and offers announced during an August since 1999 when the value reached $275 billion. Still, by number of deals, it ranks lower than last August.

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