Restructuration de la dette et covenants

Valuation and Option Pricing in Financing

• Flexibility in financing involves adjusting production rates, deferring development, or abandoning a project.
• Option pricing theory defines call options as the right, but not the obligation, to buy an asset at a specified exercise price.
• The value of a call option at maturity is determined by the exercise price and the stock price.
• Option value depends on intrinsic value and time premium, influenced by stock price, exercise price, volatility, time of expiration, and risk-free rate.
• The Black-Scholes Option Pricing Model is used for valuation but has weaknesses, including difficulty in estimating volatility and inappropriate pricing for nested call series.
• Valuation involves computing the final value of a firm, discounting it, and determining the required final percent ownership while considering future dilution.
• Comparable method for valuation involves identifying similar firms, searching for potential measures of value, and applying those measures to the company being evaluated.
• Discounted cash flows valuation includes computing cash flows, calculating the terminal value, determining the discount rate, and computing the expected rate of return on equity.
• Debt restructuring involves changing characteristics of the debt contract, such as interest rate, maturity, covenant waiver, and increasing collateral.
• Valuing start-up companies is more challenging due to limited information, while public companies can be valued using common ratios like PER, market value/total revenue, and market to book ratio.
• Problems with the comparable method include overvalued companies used for comparison, unavailable information, and differences between public and private companies.
• The DCF model calculates cash flows and terminal value, determines the discount rate, computes expected return on equity, and considers the financial structure of the company.

Private Equity and Venture Capital Overview

• PE mainly raises capital for LBOs, managed by General Partners (GPs) who are responsible for day-to-day management.
• Partnerships typically last 12-15 years, with GPs not protected by limited liabilities, bearing the risk of losses.
• Limited Partners (LPs) provide funds, including mutual funds, pension funds, endowments, individuals, or families, but do not choose firms for investment.
• GPs own 1% of the partnership, while LPs own 99% and invest in diversified portfolio companies.
• GPs take management fees, typically 1.5-3% of committed capital, and receive 20% of profits as carried interest in LBOs, despite investing only 1%.
• VC was founded in the US, and the arrival of pension funds in the 1970s significantly boosted VC development.
• Largest IPO VC-backed is Airbnb, and the first VC fund was founded in 1946, with a significant return from an investment in Digital Equipment Company.
• The biggest investors of VC in Europe are government agencies, corporate investors, pensions funds, insurances companies, and private individuals.
• In the US, pension funds are the major VC investors, with investments increasing from $64 million in 1978 to $4 billion in 1986 due to diversification.
• VC works through fundraising, investment in high-growth companies, company growth support, and exit via acquisition or IPO, returning profits to LPs and GPs.
• There are different types of VCs, including independent VCs, corporate VCs, and banks VCs, with a close date being the fund's creation date.
• LBO involves acquiring listed companies using a mix of private equity funds and leverage, with 5% of transactions dedicated to LBOs, and notable successes and failures in the past.