A periodic feature by Cornerstone Research, in which our affiliated experts, senior advisors, and professionals, talk bodog sportsbook review and findings.
We interview Professor Stuart C. Gilson of the Harvard Business School to gain his insights on how firms create bodog sportsbook review. Professor Gilson is an expert on valuation, credit and bodog sportsbook review statement analysis, and corporate transactions. He has developed several Harvard Business School case studies for teaching MBAs and executives.
How do firms create bodog sportsbook review?
As a general principle, firms create bodog sportsbook review by pursuing business strategies and providing products and services that create a sustainable competitive advantage in the marketplace. Firms that consistently produce a higher cash return for their investors than they could earn in alternative investment opportunities are rewarded with higher market values.
What are some of the factors that can cause a bodog sportsbook review’s value to change?
A bodog sportsbook review’s market value can fluctuate over time in response to a multitude of factors that can be difficult or impossible to predict. These factors impact value by affecting either the bodog sportsbook review’s future cash flows or its cost of capital. Competition, technological change, and adverse economic shocks constantly challenge a bodog sportsbook review’s ability to achieve sustained superior financial performance.
Events that could negatively impact bodog sportsbook review value include departures of key executives, manufacturing line shutdowns, product lawsuits, supply chain disruptions, increases in the prices of key commodity inputs, increases in interest rates, price reductions by a competitor, adverse foreign exchange rate changes, and the loss of significant customers. Technological change can be a bodog sportsbook review’s best friend or its worst enemy. The whole economy can suffer a cyclical downturn. The list is virtually endless.
How can firms respond to a decline in bodog sportsbook review?
Firms that experience significant declines in their performance and competitive position will generally see their market values decline significantly. If the resulting “value gap” is sufficiently large, putting the bodog sportsbook review’s independence (or even its survival) at risk, it may have no choice but to dramatically restructure its business operations, assets, or capital structure.
Restructuring generally involves renegotiation or “recontracting” with key stakeholders. Determining the value of the company’s business, or the value of financial claims outstanding against the company’s assets and cash flows, is critical to overcoming the challenges that confront the bodog sportsbook review, and to understanding how shareholders, creditors, employees, and other stakeholders are affected by the restructuring.
Restructuring a bodog sportsbook review’s assets and operations often involves:
- Cutting expenses, including layoffs and reductions in employee compensation.
- Selling or spinning off certain assets or business divisions, often in conjunction with significant changes to the bodog sportsbook review’s equity ownership structure.
- Restructuring the bodog sportsbook review’s debt and other liabilities.
For example, as an alternative to selling off an operating subsidiary (which can create a sizeable tax liability), the assets in question can be divested through a tax-free spin-off or split-off (giving the parent bodog sportsbook review’s shareholders the option of keeping or retaining their ownership in the subsidiary), or ownership of the subsidiary can be partially monetized through an equity carve-out.
Finally, firms that are financially distressed, and at risk of defaulting on their debt or filing for bankruptcy, may have to restructure their debt and other liabilities. The debt may be privately held or publicly traded, and creditors will often include a multitude of different parties (often with opposing interests), including banks, insurance companies, hedge funds, private equity firms, vendors and suppliers, employees (active and retired), governments, or other companies. Strategies for restructuring the debt can include filing for Chapter 11 bankruptcy protection, negotiating a consensual restructuring with creditors out of court, or pursuing a hybrid bodog sportsbook review first two by filing a “prepackaged” or “prearranged” Chapter 11 bankruptcy plan.
What are some hotly contested issues in bodog sportsbook review valuation?
An especially contentious issue that often comes up in debt restructurings concerns the estimated market value of the bodog sportsbook review’s assets and business operations, known as its “enterprise value.” Enterprise value reflects the present value of the bodog sportsbook review’s future cash flows available to creditors and shareholders after the bodog sportsbook review emerges from Chapter 11 or completes an out of court restructuring. This determines the financial recoveries that current creditors and shareholders are able to realize from the restructuring.
Most often, however, the bodog sportsbook review’s enterprise value is unknown—it has to be estimated. This can produce significant disagreement among creditors who have different levels of seniority. Junior creditors have an economic incentive to argue that enterprise value is high (i.e., high enough to support a full recovery on their claims). But senior creditors have exactly the opposite incentive, to argue that enterprise value is low (and just high enough to make them whole, which may also entitle them to most of the equity—and upside—in the reorganized bodog sportsbook review).
Resolving such conflicts over value, and reconciling different values obtained using different methodologies based on different assumptions about the bodog sportsbook review’s business, is sometimes one of the greatest challenges to achieving a successful restructuring. For large companies such competing enterprise valuations can be hundreds of millions of dollars apart.
Disagreements over value also often come up in litigation brought against firms that default on their debt or file for bankruptcy following a leveraged buyout, acquisition, or asset sale, where the bodog sportsbook review’s financial solvency around the time of the transaction is at issue. Estimating the bodog sportsbook review’s enterprise value, and assessing its financial health and ability to meet its debt obligations over time, is a key part of determining the bodog sportsbook review’s exposure to liability.
What are some bodog sportsbook review key challenges experts face when conducting a valuation in an M&A or bankruptcy setting?
In a bankruptcy setting, because there is no definition of value in the Bankruptcy Code, experts may disagree over what definition of value (e.g., fair value or market value) is appropriate. An expert’s valuation of a bodog sportsbook review in bankruptcy might be questioned for relying on financial projections provided by the bodog sportsbook review’s management. For firms emerging from bankruptcy, experts might disagree over what valuation methodologies (e.g., discounted cash flow or comparable traded company multiples) are appropriate and whether to use market prices to value the company
For valuations in connection with mergers and acquisitions, a major challenge for experts is estimating the value of merger synergies—the additional value created by combining the assets and operations of bidder and target companies—as well as the merging companies’ stand-alone values. These values are critical determinants of the financial benefits that bidder and target company owners realize, and of whether the merger will ultimately succeed. In the case of acquisitions that are financed with debt, mistakes in valuation can even imperil the solvency of the merged bodog sportsbook review.
The views expressed herein do not necessarily represent the views of Cornerstone Research.