Provide examples of how the best owner of a business has changed over time. Give reasons for these changes.
Answer to relevant QuestionsExplain how and why the best owner of a business might change over time. What is the goal of setting performance targets? What are some of the pitfalls inherent in the way companies sometimes set targets? What would it take for an acquisition to increase the acquirer’s value by 10 percent? Give your answer in terms of size of deal, value of improvements, and premium paid. An executive is reluctant to sell a high-performing business unit, arguing that the sale would dilute the company’s ROIC to a level below the WACC and make the company value-destroying. Discuss. Discuss the importance of the “pecking order” theory for managing the capital structure of a company, in terms of both short-term, tactical financing decisions and long-term, strategic decisions.
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