Ross Geddes is a practitioner and educator in the corporate finance world. He has over 20 years of experience working on financings (both debt and equity) as well as M&A transactions. During his corporate finance career in Canada and the UK, he helped corporations and governments raise over $7 billion in equity in IPOs, secondary offerings and privatisations. Ross is the author of three other books on finance. He now resides in Canada.

• About the author xv1 ‘BEHIND THE CHINESE WALL’ 1Corporate finance in investment banking 2Chinese walls 3Corporate finance assignments 5Flotations/IPOs 6Mergers, acquisitions and divestitures 8Leveraged buyouts and management buyouts 13Financial advice 13Careers in corporate finance 15Organisation of this book 20Part I CORPORATE FINANCE TRANSACTIONS 232 SOURCES OF CAPITAL 25Debt securities 27Money market securities 27Long-term debt 29Floating rate notes 31Equity 32Preference shares 32Ordinary shares 34Hybrids (convertible securities) 363 FLOTATIONS/INITIAL PUBLIC OFFERINGS 39Primary offerings 40Ancillary benefits of flotation 46Disadvantages of flotation 46Methods of flotation 47Suitability for listing 49The offering process 52Participants and roles 52Documentation and regulation 55Due diligence and verification 57Marketing, syndication and pricing 59Underwriting 624 INTERNATIONAL EQUITY OFFERINGS 65Rationale for international offerings 66International investors 68Development of international equity offerings 69Regulation and documentation 70Depository receipts 73Marketing, syndication and distribution 75Offer structure 76Price setting, underwriting and bookbuilding 77Fees and commissions 79After the new issue 81Stabilisation 815 RIGHTS ISSUES/SECONDARY OFFERINGS 83Pre-emption rights 85Setting the price 87Calculating the theoretical rights price 88Rights issue timetable 90Fees and commissions 90Secondary offerings 94Marketed offerings 95Bought deals 96Accelerated bookbuilding 98Demergers 1006 MERGERS AND ACQUISITIONS 101Rationale for M&A 102Types of merger 104Merger waves 106Financing the transaction 107Bootstrap transactions 109Regulation of M&As 110Key elements of the City Code 1117 MANAGEMENT BUYOUTS 115Financial structure 118Bank finance (secured lending) 120Private equity funds 122Mezzanine finance 123High-yield bonds 124Part II CORPORATE FINANCE TECHNIQUES 1278 VALUING SECURITIES 129Valuing bonds 130Valuing shares and companies 132Cash flow based valuations 135Determination of terminal/residual value 139Determining the discount rate 143Determining the value of the business 143Relative valuations 146Price earnings ratio 148Price/EBIT multiple 149Market to book value 149Dividend yield 150Enterprise value to EBITDA 151Determining the value of a business based on ratios/multiples 1529 DETERMINING THE COST OF CAPITAL 159Weighted average cost of capital 160Use market values 161Use target/optimal weighting 162After tax 163Match nominal rates with nominal cash flows 163Cost of debt: Kd 165Cost of equity: Ke 166Capital asset pricing model 168Risk-free rate 170Market risk premium (equity risk premium) 170Beta (β) 171Health warning 17210 SHAREHOLDER VALUE ADDED (ECONOMIC PROFIT) 173Just another number? 174Benefits of SVA 175Calculation of SVA 177Limitations of economic profit calculations 181Appendix: UK CORPORATE VALUATION METHODS: A SURVEY 183Scoring and tables 184A.1 Valuation methodology 185A.1.1 Frequency of use 186A.1.2 Calculation of final valuation or value range 188A.2 Discounted cash flows 189A.2.1 DCF approaches 189A.2.2 Forecast period 190A.2.3 Terminal value 191A.3 Cost of capital 192A.3.1 Determining the cost of equity 192A.3.2 Capital asset pricing model 193Sources of information 197Glossary 199List of abbreviations 211Additional reading 213Index 215