Valuating a German business - Case adidas: Usage of the valuation methods discounted cash flow and multiples factors
Research Paper (undergraduate) from the year 2012 in the subject Business economics - Investment and Finance, grade: 1,3, University of Applied Sciences Essen, course: Financial Management, language: English, abstract: Valuation of companies is done for many reasons. The evaluation of alternative strategies for decisions to sell or buy a company is the widest known purpose among literature. The alternatives can be categorized into three parts: mergers and acquisitions, succession and continuation. The former reflects the selling or buying decision of companies, and the acquisition of shares and mergers. Succession means management buyouts, whereas continuation refers to reorganization, monitoring of financial standing and liquidity flotation, investments but also divestments and spin offs (cf. Hansa & Dvorak 2007). Adidas has gone through several valuations already. In 1994 Adidas was sold for 1,350 million German Mark whereas in mid-1995 the company was already valued at 3,300 million German Mark when it was initially offered to public (cf. Die Welt 1995). As of December 31st 2010 the price for an Adidas share was 48.89 Euro (€), reflecting a 29.4% growth compared to 2009 (cf. Adidas 2011 a, p. 2). The following paper on hand values the German company Adidas as of December 2010 with help of the valuation methods Discounted Cash Flow in terms of equity and entity approach as well as the market oriented multiples. Both valuation methods are theoretical defined and later applied to Adidas.
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abbrev Amer Sports Annual Report 2010 Appendix beta book value capital employed capital structure CAPM Change 2013e Change compared to 2010 cost of capital cost of debt DCF approach debt capital Deckers Outdoor Discounted Cash Flow discounting rates EBIT EDM Publications enterprise value entity and equity entity method equity approach equity capital Equity ratio Euro expected return Financial expenses Flow to Equity Free Cash Flow German company Adidas Gross Free cash Hainer Herzogenaurach investments Knüsel market capitalization market oriented approach market portfolio market risk premium market value million MSCI multiples Nike NOPAT notional tax Operating profit operational margin peer group present value Price per Share Projected data Puma Reebok reference figure Retrieved 0202 risk free rate Royalty and commission Seppelfricke 2003 share price shareholder value Skechers sport footwear Table Tax shield Unternehmensbewertung valuation methods valuation process value of company value of debt value of equity WACC