Uploaded April 2025 | Updated September 2026, 1 week ago
In this class, we continued to make a case against acquisition practices, with transaction multiples, accretion and defensive deals all under fire, before looking at the narrow pathways to generating value from acquisitions (go small, buy private, focus on cost synergies). We then started our discussion of value enhancement, by drawing a contrast between price and value enhancement. With value enhancement, we broke down value change into its component parts: changing cash flows from existing assets, changing growth rates by either reinvesting more or better, lengthening your growth period by creating or augmenting competitive advantages and lowering your cost of capital. In the next and last session for this class, we will use this framework to compute an expected value of control as a the product of the probability of changing the way a company is run and the value increase from that change (optimal - status quo value).
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/valenh.pdf
Slides: nyu.box.com/s/tm2dtpm5f9r844rlhz7ky6ek4pofdnqm
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25soln.pdf
In this class, we continued to make a case against acquisition practices, with transaction multiples, accretion and defensive deals all under fire, before looking at the narrow pathways to generating value from acquisitions (go small, buy private, focus on cost synergies). We then started our discussion of value enhancement, by drawing a contrast between price and value enhancement. With value enhancement, we broke down value change into its component parts: changing cash flows from existing assets, changing growth rates by either reinvesting more or better, lengthening your growth period by creating or augmenting competitive advantages and lowering your cost of capital. In the next and last session for this class, we will use this framework to compute an expected value of control as a the product of the probability of changing the way a company is run and the value increase from that change (optimal - status quo value).
Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/valenh.pdf
Slides: nyu.box.com/s/tm2dtpm5f9r844rlhz7ky6ek4pofdnqm
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25test.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session25soln.pdf
