Hichem CHEHBANI’s Post

We are excited to announce that we will be a Sponsoring Partner at this year’s Structured FINANCE Conference. As part of our involvement, MP Founding Partner Roman Göd will be hosting a Focus Talk on "Smart Deal Structuring in M&A Transactions."   During the session, we will discuss how to structure M&A transactions effectively and navigate emerging trends in the M&A space. This will be an excellent opportunity to gain valuable insights on current trends of bridging the valuation gap.   Join us to and stay ahead of the curve in M&A: https://lnkd.in/dEUcrPfN #MP #finance #mergersandaquisitions #investmentbanking #trends #industry #insights #marketinsights #businessinsights #20JahreSF #structuredfinance #SF2024

Understanding WACC: A Key Financial Metric 🔍 I’m excited to share a PDF I’ve put together that explores the concept of Weighted Average Cost of Capital (WACC). In it, I cover: What WACC is and why it matters in financial decision-making WACC is crucial for evaluating investment opportunities and assessing the cost of financing. I believe understanding this metric can enhance our financial acumen and drive better strategic decisions. Feel free to download the PDF and share your thoughts or any questions you may have! Follow Sarabjeet Singh for such Insightful premium content Repost to help others..!! #Finance #WACC #Investment #FinancialLiteracy

🔥 Master the Art of Smart Investments with WACC! 🔥 💡 Do you know how much it really costs your business to raise capital? Unlock the secrets behind Weighted Average Cost of Capital (WACC)—the ultimate tool for smarter investment decisions, risk assessment, and business growth! 📊 From understanding its formula to real-world applications, this guide covers every detail you need to optimize your capital structure and maximize returns. Ready to level up your financial game? 🚀 Swipe through to learn more! 👉 #linkedinfamily #investment #WACC #capital #debt #economy #learning #finance #motivation #GDP

💡WACC (Weighted Average Cost of Capital) : What It Is and Why It’s Important📊 One of the most commonly asked interview questions and a key metric in stock evaluation is WACC. What is WACC? Simply put, WACC is the minimum hurdle rate a company must meet to finance its capital efficiently. Formula: WACC = (Weight of Equity × Cost of Equity) + (Weight of Debt × Cost of Debt) Why WACC is Used: 1️⃣ Investment Decisions: Companies use WACC as a hurdle rate when evaluating potential investments, comparing it against expected project returns. 2️⃣ Valuation: In Discounted Cash Flow (DCF) models, WACC is often used as the discount rate, helping to determine a company's valuation. 3️⃣ Risk Assessment: A lower WACC can indicate lower risk, often due to stable earnings or high creditworthiness. Understanding WACC can give valuable insights into a company's financial health and its attractiveness to investors. 💼📈 What are your thoughts on the importance of WACC in investment decision-making? Let’s discuss! 🤔💬 #Finance101 #InvestmentBanking #WACC #FinancialAnalysis #StockMarket #InterviewPreparation

Understanding WACC: The Cornerstone of Sound Financial Decision-Making In the world of finance, the Weighted Average Cost of Capital (WACC) is more than just a formula—it's a critical tool that influences strategic business decisions. 📊 WACC represents a firm's average cost of capital from all sources, including equity and debt, weighted according to the proportion each contributes to the total capital structure. Here's why it matters: 1️⃣ Investment Appraisal: Companies use WACC as a hurdle rate to evaluate new projects. It helps determine whether an investment will yield returns exceeding the cost of financing it. 2️⃣ Optimal Capital Structure: By analyzing WACC, firms can find the ideal mix of debt and equity financing that minimizes costs and maximizes value. 3️⃣ Valuation and M&A: In mergers and acquisitions, WACC is essential for discounting future cash flows to value a target company accurately. 4️⃣ Performance Measurement: Investors and analysts use WACC to assess whether a company is generating returns above its cost of capital, indicating efficient management and growth potential. Understanding and effectively applying WACC can lead to more informed decisions, better resource allocation, and enhanced shareholder value. 🌟 #Finance #WACC #Investment #CapitalMarkets #FinancialAnalysis #CorporateFinance #Investing #Valuation #FinancialModeling #BusinessStrategy #RiskManagement #Finance #ValueAtRisk #FinancialRisk #Investing #PortfolioManagement #QuantitativeFinance #RiskAnalysis #MarketRisk #CapitalAllocation #FinancialPlanning #RiskMetrics #InvestmentStrategy #Investing #Economy #FinTech #Economics #StockMarket #InvestmentBanking #WealthManagement

𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐒𝐞𝐫𝐢𝐞𝐬 : 𝐇𝐨𝐰 𝐭𝐨 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐖𝐀𝐂𝐂 𝐟𝐨𝐫 𝐚 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐜𝐨𝐦𝐩𝐚𝐧𝐲? WACC represents the average rate of return a company is expected to pay its security holders to finance its assets. It’s essentially the company's overall cost of capital, blending the cost of equity and the cost of debt. For private companies, WACC is vital in investment appraisal, valuation, and performance measurement. It helps determine the minimum return required to satisfy investors and creditors, guiding crucial business decisions. 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐧𝐠 𝐖𝐀𝐂𝐂: 𝐀 𝐒𝐭𝐞𝐩-𝐛𝐲-𝐒𝐭𝐞𝐩 𝐆𝐮𝐢𝐝𝐞 𝐃𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐞 𝐭𝐡𝐞 𝐂𝐨𝐬𝐭 𝐨𝐟 𝐃𝐞𝐛𝐭 (𝐊𝐝): Find the interest rate on the company’s debt. For private companies, use the interest rate on recent loans or bonds. Calculate the after-tax cost of debt: Kd=Interest Rate×(1−Tax Rate) 𝐃𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐞 𝐭𝐡𝐞 𝐂𝐨𝐬𝐭 𝐨𝐟 𝐄𝐪𝐮𝐢𝐭𝐲 (𝐊𝐞): CAPM Method: Risk-Free Rate (Rf): The return on risk-free securities like government bonds. Beta (β): Measure of a stock's volatility relative to the market. For private companies, use industry average beta. Equity Risk Premium (ERP): The additional return expected from the market over the risk-free rate. 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐭𝐡𝐞 𝐖𝐞𝐢𝐠𝐡𝐭𝐬: Weight of Debt (Wd): Proportion of debt in the company's capital structure. Weight of Equity (We): Proportion of equity in the company’s capital structure. 𝐂𝐨𝐦𝐩𝐮𝐭𝐞 𝐖𝐀𝐂𝐂: 𝐅𝐨𝐫𝐦𝐮𝐥𝐚: 𝐖𝐀𝐂𝐂=(𝐖𝐞×𝐊𝐞)+(𝐖𝐝×𝐊𝐝) Understanding and calculating WACC for private companies might seem daunting, but breaking it into steps makes it manageable. Accurate WACC helps in making informed financial decisions and valuing a company effectively. Keep these steps handy, and you'll master WACC in no time! 🚀 Feel free to share your thoughts and questions in the comments. Happy calculating! 📊✨ #Finance #WACC #PrivateCompany #Investing #Valuation #FinancialEducation

Hey #connections, Looking to dive deeper into company valuation? Let's talk about WACC (Weighted Average Cost of Capital)! It's a crucial metric that tells us the average cost of a company's financing, considering both debt and equit . . A big shoutout to Parth Verma sir and The Valuation School whose financial modelling course on YouTube sparked my interest in this crucial metric. . . Follow for more !! . . #WACC #financialmodelling #Valuation #DCF #Finance #Equityresearch #Investmentmanagament

✨ WACC Cheat Sheet ✨ What is the Weighted Average Cost of Capital (WACC)? 🤔 💡 WACC is the average after-tax cost of a company’s capital from all sources, including common stock, preferred stock, bonds, and other hybrid debt and equity instruments. It represents the mean rate a company pays to fund its operations. 📊 ⚖️ FORMULA: WACC = [(E/V) x Re] + [(D/V) x Rd x (1 - Tc)] E = Market value of equity 🏢 D = Market value of debt 💰 V = E + D Re = Cost of equity 📈 Rd = Cost of debt 💵 Tc = Corporate tax rate 🏦 How It Works: WACC is calculated by multiplying the cost of each capital source (debt and equity) by its respective weight and then summing these values together. It serves as a benchmark for evaluating projects and acquisitions for both companies and investors. If the expected return of a project is higher than WACC, it’s worth pursuing. 🌟 WACC is also used as the discount rate when performing a discounted cash flow (DCF) analysis to value future cash flows. 🔮 Example: E = $750M D = $250M V = $1,000M Re = 12% Rd = 8% Tc = 25% WACC = [($750 / $1,000) x 12%] + [($250 / $1,000) x 8% x (1 - 25%)] = 11.5% #Finance101 #WACCExplained #CorporateFinance #InvestmentTips #CostOfCapital #ValuationMatters #FinancialCheatSheet

Understanding WACC: A Key Metric for Financial Decision-Making The Weighted Average Cost of Capital (WACC)is a widely used metric to determine a company's required rate of return. It reflects the return investors expect in exchange for providing capital, considering both equity and debt contributions. When a company’s stock is volatile or its debt carries significant risk, WACC tends to rise as investors demand higher returns to compensate for the increased uncertainty. Key Components and Adjustments in WACC Calculation: 1. Risk-Free Rate 2. Equity Premium Rate - Adjusted for releveled industry beta 3. Size Risk Premium 4. Country Risk Premium 5. Specific Risk Premium 6. Cost of Equity Cost of Debt - Before-tax cost of debt - Adjusted for tax effects - After-tax cost of debt Finally, the weighted average of equity and debt costs is calculated to derive the WACC, serving as a vital benchmark for evaluating investment decisions and the financial health of businesses. Understanding and optimizing WACC ensures that companies remain attractive to investors while managing their cost of capital efficiently. #Finance #WACC #Investment

Valuation in a concise format 📓 Two of our great colleagues from the #IASB Capital Markets Advisory Committee have written a concise introductory guide to #valuation. And they cover some of the accounting issues one can expect to experience along the way. The Valuation Book, by Matthias Meitner, CFA, Kenneth Lee, Mark Aleksanyan, and Neil Prande #investing #IFRSAccounting