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FINA4210 April 18 2011

FINA4210 April 18 2011 - management team or sell to the...

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Laws, Taxes, Regulations affect Capital Markets 1. Remove the beneficial tax treatment of capital gains (Stock price goes up) 2. Double Taxation of Dividend (Net income is Taxed – If paid out to shareholders, taxed as regular income) 3. 1987 – Market Crash “or break” - Congress was in process of passing law that removed the interest of debt deductibility; especially, if “hostile takeovers” - = PV CFWACC - - Eskimo Pie Corporation 1.
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Unformatted text preview: management team, or sell to the public through IPO? 2. The company was located in Richmond, VA. The management team recognized that if Eskimo Pie to Nestle, a Switzerland firm, the company would have a major lay-off. 3. Because the 1987 market crash, raising the debt to do the leverage buyout was not an option. So the decision came down to doing the IPO. 4.-...
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