Rating and ranking firms with fuzzy expert systems: the case of Camuzzi

Carlo Alberto Magni

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we present a real-life application of a fuzzy expert system aimed at rating and ranking firms. Unlike standard DCF models, it integrates financial, strategic and business determinants and processes both quantitative and qualitative variables. Twenty-one value drivers are defined, concerning the target firm (strategic assets in place and expected financial performance), the acquisition (synergies, quality of management) and the sector (intensity of competition, entry barriers). Their combination via “if-then” rules leads to the definition of an output represented by a real number in the interval [0,1]. Such a number expresses the value-generating power of the target firm inclusive of synergies with the bidder (Strategic Enterprise Value). The system may be used for rating and ranking firms operating in the same sector. A regression analysis using hostile takeovers multiples may be employed to translate the score into price. The real-life case refers to Camuzzi (a natural gas distributor), acquired by Enel, the Italian ex monopolist of electric energy.

Keywords: Corporate finance; firm; rating; ranking; expert system; fuzzy; evaluation (search for similar items in EconPapers)
JEL-codes: C02 C6 G30 G31 G34 M21 (search for similar items in EconPapers)
Date: 2007-06
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Rating and ranking firms with fuzzy expert systems: the case of Camuzzi (2004)
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