one of the largest cable operators in the U.S., prepared to acquire the AirThread. Connections (ATC), a large regional cellular provider. Although this acquisition. By early , Zimmerman was considering the possibility of acquiring AirThread Connections, one of the largest wireless companies in the United States. This case can be used as a capstone valuation exercise for first-year MBA students in an introductory finance course. A senior associate in the business.
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This case can be used as a capstone valuation exercise for first-year MBA students in an connectionns finance course. A senior associate in the business development group at American Cable Communications, one of the largest cable companies in the U. The acquisition would give American Cable access to wireless technology and the wireless spectrum and enable the company to offer competitive service bundles including wireless, currently a hole in the company’s service offering.
Students learn the basic valuation concepts including DCF discounted cash flow using APV adjusted present value and WACC weighted average cost of capital and they must choose the appropriate approach for situations in which the capital structure is changing or assumed to be constant.
In addition, students analyze the effects of non-operating assets on valuation. As an additional assignment, instructors can require students to consider the personal tax disadvantage of debt as well as the synergies American Cable expects conenctions achieve following the acquisition.
Stafford, Erik, and Joel L. Erik Stafford and Joel L.
AirThread Connections Case
Juliane Begenau and Erik Stafford. Article Journal of Finance. The Cost of Capital for Alternative Investments. Jurek and Erik Stafford.
Valuation of AirThread Connection by Ivan Ng on Prezi
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Technology and Operations Management. Heilprin Teaching note for case Cite View Details Purchase Related. About the Author Erik Stafford. Juliane Begenau and Erik Stafford We decompose bank activities into passive and active components and evaluate the performance of the active components of the bank business model by controlling for passive maturity transformation strategies that can be executed in the capital market.
Over the period —, we find that 1 unlevered bank assets underperform passive portfolios of maturity-matched U.
Treasury bonds; 2 the cost of bank deposits exceeds the cost of bank debt; 3 bank equities have CAPM betas near one, while passive maturity transformation strategies have CAPM betas near zero; and 4 portfolios of bank equities consistently underperform portfolios designed to passively connectins their economic exposures. The very strong investment performance of passive maturity transformation strategies over this period may mask the underperformance of the specialized bank activities.
Begenau, Juliane, and Erik Stafford. Publicly traded equities with these characteristics have high risk-adjusted returns after controlling for common factors typically associated with value airtbread.
Valuation of AirThread Connections Essay
Hold-to-maturity accounting of portfolio net asset value eliminates the majority of measured risk. A passive portfolio of small, low EBITDA multiple stocks with modest amounts of leverage and hold-to-maturity accounting of net asset value produces an unconditional return distribution that is highly consistent with that of the pre-fee aggregate private equity index.
We show that the high excess returns to hedge funds and put-writing are consistent with an equilibrium in which a small subset of investors specialize in bearing downside market risks.
Required rates of return in such an equilibrium can dramatically exceed those suggested by traditional models, affecting inference about the attractiveness of these investments. Cite View Details Purchase. Cite View Details Read Now.