ADVENTIS FMC COMPREHENSIVE EXAM
STUDY GUIDE WITH COMPLETE
SOLUTIONS
●● who said, "Value is what people are willing to pay for"
Answer: John Naisbitt
●● 2 primary types of valuation
Answer: 1. relative valuation
2. intrinsic valuation
●● relative valuation refers to what
Answer: methods that compare the price of a company to the market
value of similar assets
●● intrinsic value refers to what
Answer: 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
Answer: transaction value
, ●● in an M&A context, what is equity value
Answer: 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
Answer: - 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)
- Result is 100 - 13 = 87
- TV = $100M
- Purchase price = $87 (check to shareholders of acquired company)
●● 2 primary types of relative valuation
Answer: 1. comparable company analysis
2. acquisition comparables analysis
●● comparable companies analyses (public trading comparables
analyses)
Answer: - most common types of relative valuation
STUDY GUIDE WITH COMPLETE
SOLUTIONS
●● who said, "Value is what people are willing to pay for"
Answer: John Naisbitt
●● 2 primary types of valuation
Answer: 1. relative valuation
2. intrinsic valuation
●● relative valuation refers to what
Answer: methods that compare the price of a company to the market
value of similar assets
●● intrinsic value refers to what
Answer: 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
Answer: transaction value
, ●● in an M&A context, what is equity value
Answer: 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
Answer: - 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)
- Result is 100 - 13 = 87
- TV = $100M
- Purchase price = $87 (check to shareholders of acquired company)
●● 2 primary types of relative valuation
Answer: 1. comparable company analysis
2. acquisition comparables analysis
●● comparable companies analyses (public trading comparables
analyses)
Answer: - most common types of relative valuation
