Regression analysis as a valuation model : A case study of North American and European construction industry mergers and acquisitions

• Main Authors: Broström, Oskar, Larsson, Marcus
• Format: Others
• Language: English
• Published: KTH, Matematisk statistik 2015
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-170152

During a company acquisition, one of the advising investment banks’ prime tasks is to valuate the target company. The potential value of the company is usually presented during a pitch when the investment bank try to convince the company owners that they should be chosen to advise on the sale. There are numerous factors affecting the company value, both internal such as revenues and earnings, and external factors like taxes and the region of origin. When presenting this indicative valuation to a prospective client, can multiple linear regression analysis provide a more accurate valuation than the Comparable Companies Valuation model, and how well does it fit the needs of the investment bank? These matters are investigated by using a robust regression model based on the factors mentioned above, and the appropriateness of the model is discussed with a professional from the financial industry. The thesis concludes in that the regression model indeed provides better accuracy than the Comparable Companies Valuation model, but that it is not suitable for all clients.