This 8 page paper looks at a case study supplied by the student. The first question considers why Equitable may want to sell a share of DLJ, then what the differences along with advantages and disadvantages are of spin offs, carve out, asset sales and continued ownership. The last part of the paper loiks at the way the share prices may be valued. The bibliography cites 1 source.
Name of Research Paper File: TS14_TEdljcase.rtf
Unformatted Sample Text from the Research Paper:
its own after then, including the sale of a stake to AXA, restructuring and demilitarisation. During this time the original asset management operations; Alliance Capital Management were separated. DLJ focused
in the higher margin incomes, such as underwriting IPOs as well as high yield debt. The strategy was one of taking risks during difficult times and remaining lean when the
times were good. The company has a merchant banking group, a financial services group and Investment Services group, making this a diversified complex company. These changes create pressures
for the maximisation of resources, especially as the times when the largest profits made on IPOs have passed, there is the need to cut back on costs. However we look
at it DLJ appears to be a capital intensive company with a wide range of operations and wants to continue to grow. If capital needs to be raised then
this is a company that may give offer perceived good returns as for the last five years it has been outperforming the industry growth levels. Equitable obviously do not want
to loose control as it is only a 20% stake they are seeking to sell, meaning that they are retaining control, but that the company will be able to raise
financing of its own. From the Equitable standpoint this may mean that they will be better placed to use capital that is already within the firm more profitably, lessening
the opportunity costs of investing in DLJ. The same capital they may have been used in DLJ may not be moved elsewhere within Equitable. Looking at the sale that
was to occur there were two types of shares that were to be sold, primary shares, which came for the company, the money would go to the company, it is