Karl Marx :: essays research papers fc

KARL MARX: HIS WORKS This paper will be about the main elements of Karl Marx’s work, which includes the Paris Manuscripts, which will focus on alienation. The Communist Manifesto, which will focus on Marx’s political and economic theories and Capital Vol. 1., Marx’s final work about how profits are made by the capitalist. Karl Marx was a liberal reformist who believed that capitalism could be reformed and inequality and exploitation of the working classes could be addressed and abolished. (Stones, p.22) . In 1844 Karl Marx wrote and published â€Å"The economic and philosophic manuscripts of 1844†, better known as â€Å"The Paris Manuscripts.† This was Karl Marx’s first work, where he writes a study about alienation of workers. (Hughes p.27) What does one mean by alienation? Karl Marx states that the alienated person feels a lack of meaning in his life, or a lack of self-realization. (Hughes p.27) â€Å"One must understand, he argues, that there are three types of alienation. The first type of alienation is alienation from oneself. The second type of alienation is alienation from his fellow human beings. The third type of alienation is alienation from the world as a whole. These three forms of alienation are interconnected, and Karl Marx describes the connections between them. This is the core of his approach to the problem of alienation (Monthly Review, 2000, p.36-53). An example of alienation does not have to stem from the workplace, however. For example, I k now many persons who attend the same church as I do, but attend it for completely different reasons. I go to church to pray, to continue the family tradition, and to enjoy in the church functions. People go to church for a variety of reasons. People who attend the church only to be seen there and be superficially perceived as believers, are soon discovered and identified as such, and are usually alienated from the congregation.   Ã‚  Ã‚  Ã‚  Ã‚  In 1844 Karl Marx met Fredrick Engels, another intellectual, and they became good friends and collaborators for life.   Ã‚  Ã‚  Ã‚  Ã‚  The Communist Manifesto was Karl Marx’s best-known work. The Communist Manifesto was intended to be a book easy to read and understand by the working class. (Manning, Lecture Notes) Karl Marx believed that if everyone understood what the bourgeoisie was doing in order to exploit the worker, the proletariat would unite and stage a revolution against the bourgeoisie. The Communist Manifesto was published in 1848, just before practically all of Europe became engulfed in revolution.

The End of Make Believe Essay -- Analysis, Claudia Kalb

In a culture saturated in high tech toys that explode with dynamite sounds and whirling lights, children spend countless hours watching television and playing video games and less time engaging in creative and imaginative play. In Claudia Kalb’s article â€Å"The End of Make Believe,† she introduces the Knott family from Cleveland, Ohio. Kris Knott and her husband, parents of three active children, are striving to get back to the basics of play by increasing family time and decreasing their children’s television and video game usage. During the summer months, it would not be uncommon to find the entire family outside enjoying a pleasant evening together. Mrs. Knott states that â€Å"entertainment is not play† and children need carefree, less structured time to use their imaginations (Kalb, par.1). While the Knott’s children have plenty of organized activities such as after school sports, their parents recognize the importance of using imaginatio n and creativity as a source of play (Kalb, par.1). In the same manner, parents must limit children’s time engaging in technology by creating quality family time and encouraging more creative and imaginative play for intellectual, emotional, and social skills to develop. In addition to television, today’s children are inundated with a wide variety of technological choices such as video games, Internet games, and other interactive activities. Despite these advanced technologies, television continues to play a large role in today’s society and while it began as an element to unite the family, it appears to be dividing the family apart now (Winn 437). While television provides us with hours of entertainment, stirs emotions deep inside, and is a tool for gathering information, most experts agree ... ...roviding the â€Å"box† for more creative and imaginative play. In addition, parents must gather around the dinner table and create family traditions that will last forever in their children’s memories. Parents must emulate the Knott family who are creating memories by spending time together outdoors instead of watching television in separate rooms. As a result, these children develop intellectually, emotionally, and socially and contribute both to their family and community. Elyssa Knott, at the young age of 11 states, "How much fun could you possibly have if you didn't use your imagination?" (Kalb, par.1) As parents follow Kris Knott and her family’s example, they will see their own family beginning to change and acknowledge the importance of spending quality time together, letting go of the television remote and stepping back to the basics of play.

Cinderella †Family Therapy Essay

Cinderella’s case conceptualized using a Bowenian transgenerational model According to Bowen, one of the pioneers of family therapy, family can be understood as an emotional unit, which can be best analyzed through a multigenerational framework. Cinderella’s story, which was told by many professional storytellers, including brothers Grimm (19 century) and Charles Perrault (17 century), as many other famous fairytales lacks many important details and characters’ descriptions that a therapist would need for administering family treatment involving transgenerational model. If we would speculate knowing some information about Cinderella’s family members, the transgenerational model would work beautifully. A chronic anxiety of Cinderella, her unstable, submissive behavior, could be explained by anxiety transmitted over several generations. Goldenbergs bring our attention to a few important emotional patterns of an individual:†the selection of a spouse with similar differentiation level and the family projection process that results in lower level of self-differentiation† (p. 89, 2008). Bowen would even build a prognosis for Cinderella’s children to have a reduced level of self-differentiation and being increasingly vulnerable to anxiety (Goldenberg & Goldenberg, 2008). Bowen emphasized that the multigenerational transmission programs not only the levels of self – differentiation, but also programs family’s roles and interactions. Cinderella’s marital problems could be understood very well through the lens of her family behaviours (The Bowen Center, n. d. ). My only major concern about application of transgenerational model in Cinderella’s case would be the early death of Cinderella’s parents ( her genogram is hard to build) and her latter life with the wicket, very directive stepmother, who evidently influenced Cinderella’s fragile and indecisive mind structure. Cinderella’s ability and inability to build attachments to her family members, which were not all â€Å"angels†, should be also considered when providing her with a therapy. Once again, her attachment to her loving father, her godfairy, her stepmother and stepsisters, could be easily incorporated into transgenerational model. Cinderella’s case conceptualized through Bowen’s concepts of triangulation. According to Goldenberg and Goldenberg (2008), the Bowen’s concept of triangulation would allow understanding better Cinderella’s marital problems. Probably, a few first years of Cinderella’s marriage were happy, because it was a big relieve for her to escape the stepmother cruelty. However, even her first marital years could have some initial problems. For example, the prince, who was brought up in a â€Å"normal† family, could not understand or could not believe Cinderella’s stories she told about her family. He would smile when she would share her violent memories with him. The prince mistrust and his ironic smile could initiate some negative feelings and despair in Cinderella. In this case, the stepmother’s figure would be present in Cinderella-prince conflict through Cinderella’s stories. It is particularly interesting that the third person does not need necessarily be present to create a conflict in triangulation (The Bowen Center, n. d. ). When children were born from a person (or two persons) with low self-differentiation, many other triangles and possible shifts and tensions could occur. Cinderella’s case and the object-relations model Goldenberg and Goldenberg (2008) provide a deep insight into Cinderella’s story based on the object-relation model, which is connected to the early Freudian concept of mother-child bonds. Even though the Cinderella’s relationship with her mother was very short before her mother past away, it appeared to be a foundation of many Cinderella’s later issues, such as her idealization of some women characters (godmother; later, some older women-friends), a few conflicts between her ego and id, suffering from deprivation of early attachments, developing insecurity and low self-esteem, and others. All these issues that the object-relations model would discover, could be projected to Cinderella’s later marital problems. A person who survived a trauma of loosing her both parents and the hardship of living with evil stepmother and stepsisters could have a lot of troubled thoughts and experiences that could be projected into her relationship with her spouse and children. I believe that the object-relations model (psychodynamic in its core) could provide the best insight when dealing with Cinderella’s marital problems.

My Decision to Pursue an MBA Degree

The decision to pursue a master’s degree these days is highly important due to the professionally competitive environment that we live in. Everyone has a bachelor’s degree but an MBA is a way to stay ahead from the rest, it sets you on a higher level. I chose to purse my MBA in order to further my career and have better opportunities. According to the â€Å"What’s my Jungian 16-type Personality? † assessment I have a possible career future as a manager, management trainer, stockbroker, lawyer, chemical engineer, police officer. I currently have a manager’s position inside a family owned company where there aren’t any more professional growth opportunities. In order for me to remain competitive in a very competitive job market I decide to pursue an MBA in Business Management without discarding the option of also including and MBA in Project Management as well. While searching for new jobs I have discovered that there are many positions for project managers. Some of the qualities mentioned in these job postings are that the person has to be visionary, responsible, have leadership qualities, organized, and so on. According to the results of the â€Å"What’s my Jungian 16-type Personality? † assessment I am outgoing, visionary, argumentative, have a low intolerance for incompetence, and often seen as a natural leader; so I believe I have what it takes to be a great project manager. Professional growth and/or advancement opportunities are a very important part of my decision to pursue an MBA. I was feeling stuck and unable to move forward with my career goals, but I believe that with a higher level of education I can achieve those goals. Fresh out of college I thought I had my life planned out but it was all based on me having an awesome job in a place I liked and doing what I like and what I know I’m good at. But that didn’t work out so well. So I found myself stuck at my part time job which was supposed to be only a temporary thing while I was in college. I don’t want to be one of those people who look back on their life and wonder where the time went and why didn’t they do something to change it. Although sometimes I feel frustrated and that I’m getting nowhere, I know I’m doing the right thing and I just need to hang in there. While it took me some time to actually get up and do something about it, here I am, ready to take on this MBA and land that job I am looking for.

Four Stages of Change

The first act of change is denial. For most people in this stage, change is not easy to accept, and they react to it with a sense of denial or inability to see a problem. People in this stage do not believe that change is happening realistically. To avoid showing denial, people try to focus their attention on other things. In Jamie Oliver's episodes, the citizens of Huntington focused their attention on things, such as, the amount of money it costs to buy healthier food and how much more time it would take to prepare it.The lunch ladies were very close-minded and seemed to always have an argument of denial against what Jamie was trying to preach to them. At one point in an episode, the head lunch lady even stated, â€Å"why fix something that isn’t broken. † But, the reality is, that the food and overweight issues in the small town of Huntington is an issue. They just do not want to come to terms with facing it. Change is often interpreted as foreign and uncertain feeli ngs, so people shift their attention to past customs and what makes them feel secure.Jamie's role in this stage is to help the people of Huntington understand what is happening and how it affects them. The second act of change is resistance. People begin to resist change when they realize that the change is taking place whether they want it to or not. Feelings of anger, doubt, fear, and anxiety begin to develop, which can hinder the process of change. In Jamie Oliver's episodes, the lunch ladies of the elementary school exemplified a great deal of resistance in the change Jamie was trying to put forth.They constantly spoke about how they didn’t think that what Jamie was doing would work, and constantly complained about the new roles and strategies outlined for them. These things happen because people get pushed out of their comfort zone, and arguments and non-cooperation are ways in which team members show their resistance to change. In this stage, Jamie lends an ear to the t eam members concerns surrounding the change, and tries to encourage them that everything will work out.The third stage of change is consideration. Here, team members give up on arguments and begin to become a â€Å"team player. † People start acting and learning the new ways to contribute towards the changing process. They understand the rationality of the change, and how they are an important aspect in making that change happen. Rhonda began to consider the change process when she saw how the young children reacted to the healthier food that Jamie provided for them. She gave Jamie more time to allow his process to take place.Also, the parents started â€Å"jumping on board† when they watched the demonstration that Jamie put on for them about what their kids are really eating, and how much nutrition they are really getting. People in this stage begin to start contributing towards the change to find out what is really in store for them. Jamie does a great job of helping the team members participate actively and providing them with the knowledge and training that will make them more comfortable in their new roles. The final stage of change is acceptance. In this stage, productivity and emotions are completely restored.Members of the change process begin to accept their new roles and begin to settle in, as they gain more control in whats happening. An example of this taking place is when the high school lunch ladies committed to cooking the food from scratch, as they gave their support to Jamie's cause. Jamie rewards and acknowledges the ladies for their dedication and contributions as he continues to motivate them to stay committed. It is going through this final stage of change that allows the process to actually take place within itself.

Lbo Model

Leveraged Buyout Model (LBO) Copyright 2009 Investment Banking Institute www. ibtraining. com Table of Contents I. Uses for An LBO Model on Sell-side and Buy-side Construction of LBO Model Structure and Assumptions Worksheet Purchase price calculation and considerations Sources and Uses II. Capital Structure Alternatives Integration of Proforma Balance Sheet into Financial Model Income Statement, Balance Sheet and Cash Flow Projections Integration III. IRR Analysis for Financial Sponsor and Hybrid Debt Lender IV. Sensitivity Tables V. Credit Ratios 2 Uses for an LBO Model on the Buy-SideA Leveraged Buyout Model (â€Å"LBO Model†) is a key analysis used by private equity firms / financial sponsors to evaluate a potential acquisition The goal of an LBO is to acquire a company by financing the purchase with as much debt as the cash flows of the business and the debt markets will support The more debt a financial sponsor is able to obtain to finance an acquisition, the less of an equity investment the financial sponsor has to make The higher the leverage levels, the higher the expected Internal Rate of Return (â€Å"IRR†) is for the financial sponsor / private equity firm The goal of an LBO model is to establish expected internal rates of return (â€Å"IRR†) for the acquisition using a financial model that reflects the following: Purchase price assumptions and the necessary cash needed to finance the acquisition (uses of cash) Capitalization assumptions: leverage (amount of debt), different debt tranches, equity investment amounts (sources of cash) Base case financial projections for the income statement, balance sheet and cash flow based upon the purchase price and capitalization assumptions The LBO model should be built with the ability to run sensitivities for a range of purchase prices, capitalization structures, operating assumptions, etc. 3 Uses for an LBO Model on the Buy-Side Private Equity Firms / Financial Sponsors usually have a requ ired rate of return hurdle f the expected IRR range for a potential acquisition does not meet or exceed the hurdle rate, often the PE firm / financial sponsor does not move forward with the acquisition PE firms required rates of return usually range from 15% on the low-side to 30% on the high-side, with the typical range targeted at 18% – 25% The IRR analysis is strongly driven by the amount of leverage With higher leverage levels, the financial sponsor has to invest less equity, and therefore has a higher IRR Therefore, often the goal is to leverage up the Company as much as the cash flow of the business and the debt markets will permit More leverage makes the business inherently riskier, as more of the cash flows generated by the business will be used to pay interest expense and debt serviceThe amount of leverage is largely determined by the state of the debt markets 4 Uses for an LBO Model on the Buy-Side The amount of leverage is largely determined by the state of the deb t markets For the last several years, the debt markets have been experiencing excess liquidity Because of the excess liquidity, lenders have been allowing higher leverage levels Depending on the industry and business, transactions over the last several years have been leveraged at between 4. 0x – 6. 0x recent EBITDA These higher leverage levels allow the financial sponsor to pay more for the company and still attain its required IRR The leverage level of 4. 0x – 6. x recent EBITDA is comprised of some combination of senior secured loans and junior loans (second lien, third lien, unsecured loan, hybrid debt / equity securities) Lenders may require the financial sponsor to have a minimum equity investment as % of total capitalization Minimum equity contribution is typically around 20% – 25%, depending on industry and purchase price 5 Uses for an LBO Model on the Buy-Side The LBO Model is also used for the Lenders’ perspectives Lenders like to see expected l everage and coverage ratios based upon the Company’s projected income statement, balance sheet, cash flow, and capitalization Typical ratios that lenders like to see are: Leverage RatiosTotal Debt / EBITDA Net Debt / EBITDA Secured Debt / EBITDA EBITDA / Net Interest Expense EBITDA / Cash Interest Expense Interest Coverage Statistics EBITDA / Net Interest Expense EBITDA / Cash Interest EBITDA – Capex / Net Interest Expense EBITDA – Capex / Cash Interest Expense EBITDA – Capex – ? W/C / Net Interest Expense EBITDA – Capex – ? W/C / Cash Interest Expense EBITDA – Capex – ? W/C – Taxes/ Net Interest Expense EBITDA – Capex – ? W/C – Taxes/ Cash Interest Expense 6 Uses for an LBO Model on the Sell-Side Investment Bankers often construct LBO models to: Provide this service to a financial sponsor client that is interested in pursuing an acquisitionProvide this service to a Company client where the co mpany is being sold – Illustrates the range of purchase prices financial buyers could pay and still attain their required IRR – Uses the current debt markets conditions as assumptions for the capitalization As a â€Å"gut-check† for other valuation methodologies (DCF, Public comparable company multiples, acquisition multiples) 7 Table of Contents I. Uses for An LBO Model on Sell-side and Buy-side Construction of LBO Model Structure and Assumptions Worksheet Purchase price calculation and considerations Sources and Uses II. Capital Structure Alternatives Integration of Proforma Balance Sheet into Financial ModelIncome Statement, Balance Sheet and Cash Flow Projections Integration III. IRR Analysis for Financial Sponsor and Hybrid Debt Lender IV. Sensitivity Tables V. Credit Ratios 8 Construction of LBO Model Structure and Assumptions Worksheet Build upon the Financial Model template, and modify accordingly Add a worksheet for the LBO Model Structure and Assumptio ns The LBO Assumptions tab will have drivers for Purchase price assumptions Uses: Cash required to acquire the company and pay associated fees Sources: Cash available to acquire the company (debt, equity) USES = SOURCES Capitalization assumptions IRR Analyses 9 Purchase Price Calculation and ConsiderationsThe determination of the purchase price is complicated and typically involves a full-scale valuation (DCF, public company multiples and transaction multiples) as well as extensive due diligence on Company’s operations, financial condition, management team, customers, suppliers, assets, etc. If the Company has publicly traded equity, then typically a purchase price would be calculated much as TEV is calculated: (Offer price per share * fully diluted shares) + debt + minority interest + preferred interest – cash For the purposes of this model, we are assuming the LBO of a private company, and therefore using the most recent 12 month EBITDA and EBITDA multiple as the dri vers of purchase price Purchase price = EBITDA * EBITDA multiple We are assuming the transaction closes on December 31, 2008 LBO of Company A ($ in millions) TRANSACTION ASSUMPTIONS Closing Date 31-Dec-08 2008 EBITDA $60. 0 EBITDA Multiple 6. 0xTransaction (Enterprise) Value $360. 0 Less: Existing Debt ($190. 8) Plus: Cash $0. 0 Implied Equity Purchase Price $169. 2 10 Sources and Uses Total Uses is the amount of cash necessary to complete the transaction Usually equals the purchase price plus transaction fees and any other cash payment required as part of the transaction – For the LBO of a publicly traded company, purchase price is calculated as (offer price per share * shares outstanding ) + debt + minority interest + preferred equity – cash, and cash on target’s balance sheet is used as a source Other required cash payments could be payments to certain parties that kick-in with a change of control (e. g. anagement payments, premiums to outstanding notes, etc. ) Total Sources illustrates the sources of capital to complete the transaction Usually equals debt + equity + any other cash available Total Uses = Total Sources LBO of Company A ($ in millions) TRANSACTION ASSUMPTIONS Closing Date 31-Dec-08 2008 EBITDA $60. 0 EBITDA Multiple 6. 0x Transaction (Enterprise) Value $360. 0 Less: Existing Debt ($190. 8) Plus: Cash $0. 0 Implied Equity Purchase Price $169. 2 TOTAL USES Uses Equity Purchase Price Paydown Existing Debt Financing Fees Investment Banking Fees Legal Fees Other Fees and Expenses $169. 2 $190. 8 8. 0 4. 0 1. 0 1. 0 Total Uses $374. 0 TOTAL SOURCES Amount EBITDA of Funded Multiple Capitalization $0. 0 0. 0x 0. 0% 0. 0 0. 0x 0. 0% 120. 0 2. 0x 32. 1% 90. 0 1. 5x 24. 1% 60. 0 1. 0x 16. 0% 270. 0 4. 5x 72. 2% 104. 0 27. 8% $374. 0 100. 0% Capitalization Cash Revolver Term Loan Senior Bonds Unsecured Notes with Warrants Total Debt Sponsor Equity Total Sources 11 Interest Rate Cash Pay PIK 7. 0% 7. 5% 9. 5% 0. 0% 0. 0% 0. 0% 0. 0% 1 0. 0% % of Fully Diluted Equity na na na 5. 0% Capital Structure Alternatives The Total Sources Side is comprised of the capitalization assumptions The financial sponsor typically wants to leverage the transaction as much as the business’s cash flow and the lenders will allowDepending on the conditions of the debt markets and lenders’ requirements, financial sponsors would typically provide approximately 20% – 30% of the capitalization as an equity investment The debt is comprised of different securities usually provided by different lenders Revolver / Term loan (senior secured loans) are usually provided by typical commercial banks such as Citigroup, JPMorganChase, GE Commercial Finance, etc. , and have lower interest rates Junior loans such as second and third lien pieces and unsecured loans can be provided by public markets (high yield issue) and private placements (hedge funds, junior loan providers, investment bank providing balance sheet financing, etc. )O ften, the most junior piece on the capital structure will have equity warrants attached; the most junior lender will require a much higher rate of return than the more senior lenders The financial sponsors want to attain as much of the lower-priced debt as possible; in this example, we have assumed that total senior leverage (revolver + term loan) = 2. 0x EBITDA The example shows a 4. 5x EBITDA leverage ratio, and 1. 7x EBITDA equity ratio (LTM EBITDA is $60 million in this case) Capitalization Cash Revolver Term Loan Senior Bonds Unsecured Notes with Warrants Total Debt Sponsor Equity Total Sources TOTAL SOURCES Amount EBITDA % of Funded Multiple Capitalization $0. 0 0. 0x 0. 0% 0. 0 0. 0x 0. 0% 120. 0 2. 0x 32. 1% 90. 0 1. 5x 24. 1% 60. 0 1. 0x 16. 0% 70. 0 4. 5x 72. 2% 104. 0 27. 8% $374. 0 100. 0% 12 Interest Rate Cash Pay PIK 7. 0% 7. 5% 9. 5% 0. 0% 0. 0% 0. 0% 0. 0% 10. 0% % of Fully Diluted Equity na na na 5. 0% Creation of Proforma Balance Sheet Proforma Balance Sheet ($ in millions) Balance Sheet Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Historical Dec. 31 2008 $0. 0 $16. 0 $10. 0 $1. 0 $27. 0 Financing/ Transaction Adjustments $0. 0 0. 0 0. 0 0. 0 $0. 0 Proforma Dec. 31 2008 $0. 0 16. 0 10. 0 1. 0 $27. 0 Gross PP&E Cumulative Depreciation Net PP&E $323. 2 $45. 0 $278. 2 $0. 0 0. 0 $0. 0 $323. 2 45. 0 $278. 2 Amortizable Intangibles GoodwillTotal Assets $0. 0 5. 0 $310. 2 $8. 0 65. 2 $73. 2 $8. 0 70. 2 $383. 4 Liabilities Accounts Payable Accrued Liabilities Other Current Liabilities Total Current Liabilities $11. 0 $2. 4 $0. 0 $13. 4 $0. 0 0. 0 0. 0 $0. 0 $11. 0 $2. 4 0. 0 $13. 4 Existing Debt Revolving Credit Facility Term Loan Unsecured Debt $40. 8 $100. 0 $50. 0 New Debt Revolving Credit Facility Term Loan Second Lien Unsecured Debt $0. 0 0. 0 0. 0 0. 0 $0. 0 $120. 0 $90. 0 $60. 0 $0. 0 $120. 0 $90. 0 $60. 0 Other Liabilities Total Liabilities $2. 0 $206. 2 $0. 0 $79. 2 $2. 0 $285. 4 Shareholders Equity Re tained Earnings Common Stock Total Shareholders Equity $94. 0 10. 0 $104. ($100. 0) $94. 0 ($6. 0) Total Liabilities and Equity Check $310. 2 $0. 0 $73. 2 $0. 0 ($40. 8) ($100. 0) ($50. 0) $0. 0 $0. 0 $0. 0 ($6. 0) 104. 0 $98. 0 $383. 4 $0. 0 13 Creating a proforma balance sheet on a new worksheet allows for the integration of the new capital structure / sources into the existing financial model In the purchase of a private company, the seller typically sweeps all of the cash on the balance sheet at closing In the LBO of a publicly traded company, cash would not typically be swept as it is part of the offer price per share There may be a writeup or writedown of the value of the AR, Inventory and PP&E; this has an mpact on the tax basis All financing fees incurred in the transaction can still be capitalized and amortized The Goodwill is Purchase Price + M&A Fees – New Debt – Old Book Value of Equity; this amount can no longer be amortized In the purchase of a public com pany, goodwill is calculated as equity value of purchase – book value of equity The buyer typically assumes all of the normalcourse short term liabilities The â€Å"old debt† is eliminated (as the seller typically uses proceeds from the sale to pay all existing debt) In the purchase of a public company, often the existing debt of the acquired company remains outstanding, and is â€Å"assumed† by the acquirerThe â€Å"new debt† is fed from the Total Sources cells Shareholders’ Equity may require a plug to allow for the Total Assets to equal Total Liabilities + Shareholders’ Equity Creation of Proforma Balance Sheet ($ in millions) PROJECTED FINANCIAL STATEMENTS Fiscal Year Ending December 31, 2009P 2010P 2011P 2012P 2013P 2008A Pro Forma 2008P Balance Sheet Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets $0. 0 $16. 0 $10. 0 $1. 0 $27. 0 $0. 0 $16. 0 $10. 0 $1. 0 $27. 0 $0. 0 $17. 5 $10. 5 $1. 0 $29. 0 $0. 0 $18. 4 $11. 0 $1. 0 $30. 4 $1. 9 $19. 3 $11. 6 $1. 0 $33. 8 $7. 5 $20. 3 $12. 2 $1. 0 $40. 9 $0. 0 $21. 3 $12. 8 $1. 0 $35. 0 Gross PP&ECumulative Depreciation Net PP&E $323. 2 $45. 0 $278. 2 $323. 2 $45. 0 $278. 2 $337. 9 $51. 8 $286. 1 $353. 3 $58. 8 $294. 5 $369. 5 $66. 2 $303. 3 $386. 6 $73. 9 $312. 6 $404. 4 $82. 0 $322. 4 Amortizable Intangibles Goodwill Total Assets $0. 0 $5. 0 $310. 2 $8. 0 $70. 2 $383. 4 $6. 4 $70. 2 $391. 7 $4. 8 $70. 2 $399. 9 $3. 2 $70. 2 $410. 5 $1. 6 $70. 2 $425. 4 $0. 0 $70. 2 $427. 6 Liabilities Accounts Payable Accrued Liabilities Other Current Liabilities Total Current Liabilities $11. 0 $2. 4 $0. 0 $13. 4 $11. 0 $2. 4 $0. 0 $13. 4 $11. 7 $2. 5 $1. 0 $15. 2 $12. 3 $2. 6 $1. 0 $15. 9 $12. 9 $2. 8 $1. 0 $16. 6 $13. 5 $2. 9 $1. 0 $17. 4 $14. 2 $3. 1 1. 0 $18. 2 Existing Debt: Revolving Credit Facility Term Loan Unsecured Debt $40. 8 $100. 0 $50. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $0 . 0 New Debt Revolving Credit Facility Term Loan Senior Bonds Unsecured Debt $0. 0 $0. 0 $0. 0 $0. 0 $0. 0 $120. 0 $90. 0 $60. 0 $1. 5 $100. 0 $90. 0 $66. 0 $1. 0 $80. 0 $90. 0 $72. 6 $0. 0 $60. 0 $90. 0 $79. 9 $0. 0 $40. 0 $90. 0 $87. 8 $3. 8 $0. 0 $90. 0 $96. 6 Other Liabilities Total Liabilities $2. 0 $206. 2 $2. 0 $285. 4 $2. 0 $274. 7 $2. 0 $261. 5 $2. 0 $248. 5 $2. 0 $237. 3 $2. 0 $210. 7 Shareholders Equity Retained Earnings Common StockTotal Shareholders Equity $94. 0 $10. 0 $104. 0 ($6. 0) $104. 0 $98. 0 $13. 1 $104. 0 $117. 1 $34. 4 $104. 0 $138. 4 $58. 0 $104. 0 $162. 0 $84. 1 $104. 0 $188. 1 $112. 9 $104. 0 $216. 9 Total Liabilities and Equity Check $310. 2 $0. 0 $383. 4 $0. 0 $391. 7 $0. 0 $399. 9 $0. 0 $410. 5 $0. 0 $425. 4 $0. 0 $427. 6 $0. 0 14 The Proforma Balance Sheet is then fed into the existing model’s balance sheet, and integrated appropriately into the cash flow and income statement We are assuming the transaction occurs on Dec. 31, 2008 Be careful whe n you are integrating to NOT CHANGE the income statement, balance sheet and cash flow statement for the period right efore the transaction date The income statement and cash flows for 2008 will not change because of the acquisition (as it occurs on Dec. 31, 2008, after the 2008 period has ended) Only the 2009 and onward income statement and cash flows will reflect the impact of the new capital structure / balance sheet Income Statement, Balance Sheet and Cash Flow Projections Integration The remainder of the projection model is completed as we discussed in the last class Construction of a debt and interest schedule and revolver model allows the integration of the income statement, balance sheet and cash flow projections Be careful to make sure that the cash flow for the period irectly following the transaction closing is being calculated as the changes in the proforma balance sheet and that period directly following the transaction 15 Table of Contents I. Uses for An LBO Model on Se ll-side and Buy-side Construction of LBO Model Structure and Assumptions Worksheet Purchase price calculation and considerations Sources and Uses II. Capital Structure Alternatives Integration of Proforma Balance Sheet into Financial Model Income Statement, Balance Sheet and Cash Flow Projections Integration III. IRR Analysis for Financial Sponsor and Hybrid Debt Lender IV. Sensitivity Tables V. Credit Ratios 16 IRR Analysis for Financial SponsorsThe financial sponsor’s IRR analysis accounts for all cash flows coming from the financial sponsor for or to the Company, as well as all cash flows from the Company to the financial sponsor during the period from closing the acquisition to the sale of the company (other than management fees) Often, the company pays the financial sponsor â€Å"management fees† in exchange for the financial sponsor’s ongoing support, management and advice provided to the management team as well as covering the financial sponsor’s d irect expenses and overhead allocation Management fees are expensed as an SG&A expense on the company’s income statement and range greatly, depending on company’s sizeTypically financial sponsors do not include the payment of management fees in the IRR analysis 17 IRR Analysis for Financial Sponsors Amounts that the financial sponsor pays for or to the company are counted as cash outflows; examples include Initial equity investment Any additional equity investments made into the company during the holding period Any amount received by the financial sponsor from or by the company are counted as cash inflows (other than management fees); examples include: Proceeds from sale of the company Common or preferred dividends paid to financial sponsor Proceeds from a recapitalization 18 IRR Analysis for Financial SponsorsCalculate the sale of the business, assuming it is sold on December 31, 2013 Use the 2013 projected EBITDA, and the same EBITDA multiple assumption used for the purchase of the Company in 2008 Calculate the proceeds to the financial sponsor, taking into account any equity dilution that may result from warrants, management stock plan, transaction fees, etc. SALE OF COMPANY A IN 2013 Closing Date 31-Dec-13 2012 EBITDA EBITDA Multiple Transaction Value Less: Total Debt Plus: Cash Balance $76. 6 6. 0x $459. 5 (190. 5) 0. 0 Less: Transaction Fees (1) Equity Value % Equity to Sponsor Equity to Sponsor (6. 6) $262. 4 95. 0% $249. 3 % Equity to Unsecured Lender Equity to Unsecured Lender 5. 0% 13. 1 (1) Assumes 1% of Purchase Price for Investment Banking Fees, plus $2 million in legal and other expenses. 19 IRR Analysis for Financial Sponsors The following table illustrates the categories to calculate the IRR to the financial sponsor Any cash flow from the financial sponsor for or to the company is negative Any cash flow from or for the company to the financial sponsor is positive In general there is no closed-form solution for IRR, particularly w ith variable cash flows for each year; however, excel can easily calculate the IRR using the following formula: = IRR (total cash flows over period, estimated IRR) From Total Sources tableSALE OF COMPANY A IN 2013 Closing Date 31-Dec-13 2012 EBITDA EBITDA Multiple Transaction Value Less: Total Debt Plus: Cash Balance Less: Transaction Fees Equity Value % Equity to Sponsor Equity to Sponsor $76. 6 6. 0x $459. 5 (190. 5) 0. 0 (1) % Equity to Unsecured Lender Equity to Unsecured Lender IRR to Financial Sponsor Initial Equity Investment Dividends Proceeds at Sale Total Cash Flows to Sponsor IRR Calculation 12/31/08 ($104. 0) 0. 0 0. 0 ($104. 0) 19. 1% 12/31/09 $0. 0 0. 0 0. 0 $0. 0 12/31/10 $0. 0 0. 0 0. 0 $0. 0 12/31/11 $0. 0 0. 0 0. 0 $0. 0 12/31/12 $0. 0 0. 0 0. 0 $0. 0 12/31/13 $0. 0 0. 0 249. 3 $249. 3 (6. 6) $262. 4 95. 0% $249. 3 5. 0% $13. 1IRR = IRR (Total Cash flows to sponsor 2009 – 2013, estimated IRR) 20 IRR for Hybrid Securities Holder The following table illustrate s the categories to calculate the IRR to the Unsecured Lender Recall from the sources and uses, that the unsecured lender loaned an amount of $60 million at a 10% PIK interest rate, with equity warrants equal to 5% of the fully-diluted equity of the company upon a sale Any cash flow from the lender to the company is negative (initial loan) Any cash flow from the company to the lender is positive (includes any cash interest received during the period, the payment of the principal balance plus any accrued interest at maturity, and equity to the unsecured lender at a sale)In certain cases, the exercise of the warrants would require the payment by the warrant holders to the Company of an exercise price; the proceeds from the warrant exercise would be a source of cash for the seller This is very transaction-specific and would be extensively negotiated in the agreement between the company and the lenders From Total Sources table IRR to Unsecured Lender Initial Loan Cash Interest Received Principal Repayment at Sale Equity from Warrants at Sale Total Cash Flows to Lender IRR Calculation From Debt and Interest Schedule – Cash Interest only 12/31/08 ($60. 0) 0. 0 0. 0 0. 0 ($60. 0) 12. 8% 12/31/09 $0. 0 0. 0 0. 0 0. 0 $0. 0 12/31/10 $0. 0 0. 0 0. 0 0. 0 $0. 0 12/31/11 $0. 0 0. 0 0. 0 0. 0 $0. 0 12/31/12 0. 0 0. 0 0. 0 0. 0 $0. 0 12/31/13 $0. 0 0. 0 96. 6 13. 1 $109. 8 From Balance Sheet IRR = IRR (Total Cash flows to lender 2006 – 2010, estimated IRR) 21 Table of Contents I. Uses for An LBO Model on Sell-side and Buy-side Construction of LBO Model Structure and Assumptions Worksheet Purchase price calculation and considerations Sources and Uses II. Capital Structure Alternatives Integration of Proforma Balance Sheet into Financial Model Income Statement, Balance Sheet and Cash Flow Projections Integration III. IRR Analysis for Financial Sponsor and Hybrid Debt Lender IV. Sensitivity Tables V. Credit Ratios 22 Sensitivities on Financial ModelRunning sensit ivities on your LBO assumptions is a good check to make sure the model is running properly as well as being able to show how a change in one variable will impact the whole model Sensitivity tables illustrate the impact on the model for a range of variable changes, and this LBO model has the flexibility to run sensitivities on the LBO assumptions (purchase price, capital structure, etc. ) and the business’s operations (growth rates, margins, etc) to see the impact on the expected IRRs of the financial sponsor and unsecured lender Setting up a sensitivity table: Input a range of variables on the x-axis of the chart Input a second range of variables on the y-axis of the chart link the intersection cell on the left hand corner of the chart to the cell that has the proper formula Highlight the data sensitivity tableGo to â€Å"Data† toolbar, select â€Å"Table†; a box pops up that has Row Input Cell and Column Input Cell – – For Row Input Cell, click on the cell that has the driver / assumption input for the x axis variable For the Column Input Cell, click on the cell that has the driver / assumption input for the y axis variable 23 Table of Contents I. Uses for An LBO Model on Sell-side and Buy-side Construction of LBO Model Structure and Assumptions Worksheet Purchase price calculation and considerations Sources and Uses II. Capital Structure Alternatives Integration of Proforma Balance Sheet into Financial Model Income Statement, Balance Sheet and Cash Flow Projections Integration III.IRR Analysis for Financial Sponsor and Hybrid Debt Lender IV. Sensitivity Tables V. Credit Ratios 24 Credit Ratios In determining how much money to lend to companies / financial sponsors for an acquisition, lenders analyze the amount of coverage they will have on their loans Lenders typically look at the following projected credit ratios, based on the base case scenarios, and then will run stress tests on the model to look at the impact on these r atios in the event the company takes a turn for the worse Leverage Ratios Total Debt / EBITDA Net Debt / EBITDA Secured Debt / EBITDA EBITDA / Net Interest Expense EBITDA / Cash Interest Expense 4. 1x 4. 1x 3. 0x 2. 8x 3. 7x 3. 7x 3. 7x 2. 6x 3. 0x 4. 3x 3. x 3. 3x 2. 2x 3. 3x 5. 0x 3. 0x 2. 9x 1. 8x 3. 6x 5. 9x 2. 5x 2. 5x 1. 2x 4. 1x 7. 5x Interest Coverage Statistics EBITDA / Net Interest Expense EBITDA / Cash Interest EBITDA – Capex / Net Interest Expense EBITDA – Capex / Cash Interest Expense EBITDA – Capex – ? W/C / Net Interest Expense EBITDA – Capex – ? W/C / Cash Interest Expense EBITDA – Capex – ? W/C – Taxes/ Net Interest Expense EBITDA – Capex – ? W/C – Taxes/ Cash Interest Expense 2. 8x 3. 7x 2. 1x 2. 9x 2. 1x 2. 9x 1. 6x 2. 1x 3. 0x 4. 3x 2. 3x 3. 3x 2. 3x 3. 3x 1. 7x 2. 4x 3. 3x 5. 0x 2. 5x 3. 8x 2. 6x 3. 9x 1. 8x 2. 8x 3. 6x 5. 9x 2. 8x 4. 5x 2. 8x 4. 6x 2. 0x 3. 2x 4. 1x 7. 5x 3. x 5 . 8x 3. 2x 5. 8x 2. 1x 4. 0x 25 Build an LBO Model from Scratch Build an LBO Model for Company B, using the historic financial statements (available electronically) Use the assumptions you feel are appropriate for projecting the Income Statement, balance sheet, and cash flow Use the following assumptions for the acquisition and financing: Acquisition – Closing date is December 31, 2008 – Purchase price is 7. 0x 2008 EBITDA Multiple Uses – Financing Fees are equal to 3% of purchase price – Investment banking fees are equal to 1% of purchase price – Legal fees are equal to $1 million – Other fees and expenses are equal to $1 million Sources Equity must equal 20% of total uses / sources – Revolver availability is $20 million, with total amount funded equal to 75% of Inventory and 65% of Accounts Receivable at a 5% cash pay interest rate – Term Loan is equal to 2. 5x 2008 EBITDA, to be amortized over 7 years, at a 5% cash pay inter est rate – Second Lien debt is equal to 1. 5x 2008 EBITDA, with a 10% cash pay interest rate – Unsecured Notes with Warrants fill the balance of the capital structure; 10% PIK rate with warrants equal to 15% of fully diluted equity upon sale of company Annual management fees to financial sponsor of $1 mm starting in 2007 Amortize fees over 5 year periodSale of Business in 2012 – Sold at 7. 0x 2012 multiple – Transaction fee equal to 1% of purchase price for investment banking fees plus $2 million in legal and other expenses Calculate the IRR to the financial sponsor Calculate the IRR to the unsecured lender with warrants Calculate sensitivity tables for the following: – IRR to financial sponsor for range of multiples paid and equity investment as % of total capital – IRR to unsecured lender for range of multiples paid and equity investment as % of total capital – Maximum revolver drawn for range of multiples paid and equity investment as % of total capital Add summary and credit ratios tables 26

Analysis Of Creative And Innovative Management

Analysis Of Creative And Innovative Management The good organizations become best by adopting innovation. It is more than an invention as it also includes an attitude that encourage new concepts and risk attach with that new concepts. Excessive investments are not needed if a company has awareness about innovation and can use it to create products with unique features. So they create a friendly behaviour for new concepts, ideas, risk, change and even failure (Fortune, March 3, 1997). Managerial innovations are those adjustments in the process of management that gives ideas of products and services and than help in their production and delivery to the customers. It is not essential that effectiveness and efficiencies of product or services get effects from innovations by management (http://tumipc.info). Product versus Process Innovations: Innovations in processes and products are very significant classifications of technical innovations. Product innovations either generate entirely new products with distinct features or may help in increasing the performance and physical features of old products and services. Process innovations are changes in the way products or services are manufactured, created, or distributed. Whereas managerial innovations generally affect the broader context of development, process innovations directly affect manufacturing (http://tumipc.info), the implementation of robotics. Thus product innovations are particularly important during these beginning phases. Later, as an innovation enters the phases of growth, maturity, and decline, Vodafone’s ability to develop process innovations, such as fine-tuning manufacturing, increasing product quality, and improving product distribution, becomes important to maintaining economic return (http://tumipc.info). Explain how management in your selected organization would lead staff to accept and implement innovation The Human Energy of Innovation Innovation is difficult. It’s hard not to be constrained by organisational history, politi cs and budgets. It’s even harder to think of innovation as a human energy and not a process (www.10again.co.uk). Lead the Way to Successful Innovation in Vodafone The collaboration necessary, general cultural differences that can influence the process and the importance that organizational culture has on creating an environment that supports innovation, after these presentation keynotes, I often get a few people who approach me with their stories about innovation in their organizations. They tell me how great the information was and wished they could apply it into their own organizations, but they know that it would never be supported (www.bia.ca). It seems that while individuals are given the necessary time in their jobs to generate ideas, they are not given the time that is really required to explore them through a proper process for innovation. This therefore makes it difficult, if not impossible, for true innovation to happen. Now I realize that those who asked me the que stion may not necessarily be in positions to change their organization’s cultures but maybe they could start to create change within their own spheres of influence, such as a department, plant, location, store, etc. Sometimes Vodafone need to think on a smaller scale and then demonstrate to the organization the value of what they are doing, demonstrated success will help greatly to sell the idea.