Current Challenges for Corporate Finance

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1 Guido Eilenberger Sascha Haghani Alfred Kotzle Kurt Reding Klaus Spremann Editors Current Challenges for Corporate Finance A Strategic Perspective } Springer academic network

2 Contents Introduction 1 The Paradox of Strategic Corporate Finance 1 The Transition to Strategic Corporate Finance 3 Structure of this Book 4 1 Old and New Financial Paradigms Research into Financial Theory Old Finance Neoclassical Finance Modern Portfolio Theory and Option Price Theory Empirical Financial Market Research Corporate Finance Strategic Corporate Finance On the Attractiveness of Markets and the Impotence of Market Players Complexity-Driven Problems with Valuation Information Imbalances in Markets Combining the Provision of Knowledge and Capital 25 2 Mergers and Acquisitions Managers and Investors as Market Players Traditional Collaboration Strategies Growth Driven by Strategic Corporate Finance Diversifying Business Activities Adapting the Product Portfolio to Market Requirements First-Mover Advantage for Market Pioneers Access to Resources and Fluid Market Boundaries Different Growth Strategies 42

6 Corporate Finance 18 1.7 Strategic Corporate Finance 21 1.7.1 On the Attractiveness of Markets and the Impotence of Market Players 21 1.7.2 Complexity-Driven Problems with Valuation 23 1.7.3 Information Imbalances in Markets 24 1.

3 VI Contents 3 Corporate Communication The Content of Corporate Communication Who Is Corporate Communication Aimed at? Generic Communication Strategies Communication Strategies for Mergers and Acquisitions Aligning Product Portfolios with Market Requirements First-Mover Advantage in Networks Diversification with a View to Forming a Conglomerate Fluid Market Boundaries and Access to Resources Strategic Financial Communication: Case Study - Bertelsmann 61 4 New Forms of Funding in Strategic Corporate Finance: Entrepreneurial Finance, Venture Capital, Private Equity and Hedge Funds Private Financial Investors Who Back Innovation and Growth Entrepreneurial Finance and Venture Capital From Invention to Innovation Entrepreneurial Finance for the Early Stages Venture Capital Financing for the Expansion Stage Private Equity to Top up Venture Capital Private Equity Funding Buyouts Designed to Maintain, Realign or Restructure a Company's Operations Financial LBOs - Breaking up and Selling out Hedge Fund Financing 77 5 The Importance of CSR Capital for Sustainable Strategic Corporate Finance Introduction 81

4.4 Fluid Market Boundaries and Access to Resources 60 3.

4 Contents VII 5.2 The Financial Markets' Role in Showcasing the New Concept of Value Quality Criteria for Defining "Good" Capital and "Good" Finance The Origin of Funds The Use of Funds Current Trends: The "Locust" Phenomenon The Framework for Institutional Action On the Role of Speculation The Value Discussion Revisited? The Valuation Function of the Financial Markets The Real Economy Versus Speculation: An Answer to the Question of Quality? The Role of Ratings and Certification Summary Investor Churn The Investment Landscape Today Investor Churn: A New Phenomenon? Corporate Raiders - Developments in the 1980s The "New Economy" Emerging - Developments Between the 1990s and A Worldwide Hype in M&A and Private Equity Activities - Developments Between 2002 and New Players Penetrating the Market for Equity Investment 112 Unprecedented Growth in Financial Intermediaries' Capital and Market Power 113 Funds of Funds Gaining Ground - Trend Toward Portfolio Transactions Blankness After the Hype?! - Developments Since

7 The Valuation Function of the Financial Markets 99 5.8 The Real Economy Versus Speculation: An Answer to the Question of Quality? 100 5.9 The Role of Ratings and Certification 101 5.

5 VIII Contents 6.3 How the Advent of International Investor Groups Is Rewriting the Rules of Corporate Management Alternative Financing Options Thanks to New Investor Groups - Consequences for Companies How the Advent of International Investor Groups Is Rewriting the Rules of Corporate Management - Consequences for Management Conclusion and Outlook 120 About the Authors 123

6.3.1 Alternative Financing Options Thanks to New Investor Groups - Consequences for Companies 116 6.

Finance. Undergraduate Program of Study. Graduate Program of Study. Courses. Certificate in Risk Management and Insurance. Doctor of Philosophy

Finance. Undergraduate Program of Study. Graduate Program of Study. Courses. Certificate in Risk Management and Insurance. Doctor of Philosophy University of Iowa 2015-16 General Catalog 1 Finance Chair Erik Lie Undergraduate major: finance (B.B.A.) Graduate degree: finance subprogram for the Ph.D. in business administration Faculty: http://tippie.uiowa.edu/finance/faculty.cfm