Adventis FMC Level 2 Exam 2024 Questions and Answers | Already Passed

what is value - ans what people are willing to pay for (what the buyer pays) who said, "Value is what people are willing to pay for" - ans John Naisbitt 2 primary types of valuation - ans 1. relative valuation 2. intrinsic valuation relative valuation refers to what - ans methods that compare the price of a company to the market value of similar assets intrinsic value refers to what - ans the value of a company through fundamental analysis without reference to its market value but instead around its ability to generate cash flow in an M&A context, what is EV - ans transaction value in an M&A context, what is equity value - ans purchase price a company sold for $100M and the company being bought had $15M of debt and $2M of cash, what happens and what is the transaction value and purchase price - ans - the $2M would be used by shareholders of the acquired company to pay down existing $15M in debt to make $13M in debt now (15 - 2 = 13) - the proceeds from the deal would then be used to pay down the remaining debt (EV = CS + PS + Debt - Cash)