Corporate Finance: Theory and Practice continues to hold sway as one of the most popular financial textbooks, thanks to its four unique features:

• A balanced blend of theory and practice: the authors hold academic positions at top ranking universities and business schools and are also investment bankers, private investors or sit on the boards of listed and unlisted companies
• A presentation of concepts that explain situations, followed by a discussion of techniques in a direct and succinct style
• Content enriched by the www.vernimmen.com website, which with 1,500 daily visitors is one of the leading finance teaching sites worldwide
• Free monthly updates on finance through The Vernimmen.com Newsletter, with over 60,000 subscribers

This new edition is enhanced and expanded to reflect the ongoing paradigm shift in corporate finance brought about by sustainability, environmental and social concerns. All statistics and graphs are fully updated, the newest  innovations in financial practice are discussed (such as the rise of private equity investment and the continuous decline in listed companies) and the latest financial theories are presented. The newest accounting standards are included (IFRS 16 on accounting for operating leases), and there is a new chapter dedicated to the financial organization of groups. The text will also account for the impact of Covid-19 on corporate finance, with greater emphasis on solvency and liquidity issues for companies.

Pierre Vernimmen (deceased) was a founding member and the first Coordinator of the Finance Department at HEC Paris. From 1973 to his death in 1996, he worked at Paribas as a private equity investor and, subsequently, led its mergers and acquisition teams.

Pascal Quiry holds the BNP Paribas Chair in Finance at HEC Paris. After 23 years as an M&A banker, he founded an investment fund that invests in startups and unlisted SMEs. He is also an active investor in several listed companies.

Yann Le Fur is a former Affiliated Professor at HEC Paris and is the head of the corporate finance group for Natixis in New York. He is also an active investor in several unlisted companies.

Preface

About the Authors

Frequently used symbols

1 Towards a green, responsible and sustainable corporate finance

Section I Financial analysis

Part One Fundamental concepts in financial analysis

2 Cash flow

3 Earnings

4 Capital employed and invested capital

5 Walking through from earnings to cash flow

6 Getting to grips with consolidated accounts

7 How to cope with the most complex points in financial accounts

Part Two Financial analysis and forecasting

8 How to perform a financial analysis

9 Margin analysis: structure

10 Margin analysis: risks

11 Working capital and capital expenditures

12 Financing

13 Return on capital employed and return on equity

14 Conclusion of financial analysis

Section II Investors and markets

Part One Investment decision rules

15 The financial markets

16 The time value of money and net present value

17 The internal rate of return

Part Two The risk of securities and the required rate of return

18 Risk and return

19 The required rate of return

Part Three Financial securities

20 Bonds

21 Other debt products

22 Shares

23 Options

24 Hybrid securities

25 Selling securities

Section III Value

26 Value and corporate finance

27 Measuring value creation

28 Investment criteria

29 The cost of capital

30 Risk and investment analysis

31 Valuation techniques

Section IV Corporate financial policies

Part One Capital structure policies

32 Capital structure and the theory of perfect capital markets

33 Capital structure, taxes and organisation theories

34 Debt, equity and options theory

35 Working out details: the design of the capital structure

Part Two Equity capital

36 Returning cash to shareholders

37 Distribution in practice: dividends and share buy-backs

38 Share issues

Part Three Debt capital

39 Implementing a debt policy

Section V Financial management

Part One Corporate governance and financial engineering

40 Setting up a company and financing start-ups

41 Shareholders

42 Choosing a corporate structure

43 Corporate governance

44 Initial public offerings (IPOs)

45 Taking control of a company

46 Mergers and demergers

47 Leveraged buyouts (LBOs)

Part Two Managing working capital, cash flows, financial risks and real estate

48 Bankruptcy and restructuring

49 Managing working capital

50 Cash management

51 Managing financial risks

52 Managing operational real estate

Epilogue: Finance and strategy

Top 20 largest listed companies

Detailed table of contents

Index