Business Valuation: Modelling Forecasting Hurdle Rate

Vinay Kumar Nangia, Rajat Agrawal and K. Srinivasa Reddy
Authors registered in the RePEc Author Service: Srinivasa Reddy Kotapati

MPRA Paper from University Library of Munich, Germany

Abstract: Consolidation, Combination and Diversification (CCD’s) in the emerging globalized market leads to competition and escalating the monopoly power. Given the increasing liberalization of rules, regulations and law, a number of firms are going beyond national borders and making deals triumphant. We suggest an innovative firm valuation model for M&A in the area of Corporate Finance that is NRR Approach 1.0. The methodology is divided into five phases, modeling forecasting hurdle rate, finding sales growth rate, computation of free cash flows & estimation of future free cash flows and finally determination of firm value under NRR approach. The findings suggest that NRR approach considers various imperative factors while valuing target firms for the benefit of shareholders. The value of study could be credited by NRR Approach 1.0. and this is the first of its kind model considers political, transfer and commercial risk factors while estimating hurdle rate. Hence, approach is the first version of development thought and has limited scope to validate in other industries. We believe that NRR model shall be of great help to M&A advisory firms and investment bankers while negotiating deal value in acquisition process. This would be help in exploring new dimensions of judgment and approach for academia as well as for the benefit of target firm shareholders in corporate arena.

Keywords: Business valuation; Mergers; Acquisitions; Hotel & tourism; Forecasting (search for similar items in EconPapers)
JEL-codes: G3 M1 M4 M41 (search for similar items in EconPapers)
Date: 2011, Revised 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Asian Journal of Finance & Accounting 1.3(2011): pp. 86-102

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/60420/1/MPRA_paper_60420.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:60420

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().