Financing choices of the firm´s owners have a significant impact on corporate value. Increasing the level of debt yields savings in corporate taxes due to the tax deductibility of interest and by doing so increases the value of the firm. On the other hand, higher debt also increases the probability that the firm will not be able to make the promised payments and slips into a crisis; significant costs of financial distress then reduce the value of the firm. While the popular APV approach is perfectly suited to find the debt level maximizing the value of the firm by valuing the two components and weighing the two effects against each other, valuation practice is mostly using the model to quantify the tax shield.
In our webinar we will start by refining the APV approach and discuss different “financing policies” popular in valuation practice to calculate the tax shield. In a second step we link the tax savings of a given debt level directly to the corresponding bankruptcy probability and its costs of financial distress. Comparing the financial effects of the two sides of debt against each other finally allows to find the optimal financing structure maximizing the value of the firm.
The Excel exercises show how to use simulation-based models to estimate costs of bankruptcy and the tax shield value and compare them for a given level of debt and a given financing policy. Once implemented, the tool is allowing to find the financing policy that maximizes the value of the firm.

Prof. Dr. Bernhard Schwetzler holds the chair of financial management at the HHL Leipzig Graduate School of Management. He was a research fellow and visiting professor at various international universities such as Purdue University, INSEAD Fontainebleau and EADA Barcelona. Prof. Schwetzler has published in numerous national and international journals on topics related to company valuation and financing theory (including Journal of Banking and Finance, Journal of Corporate Finance, Zeitschrift für Betriebswirtschaft), works as an expert in valuation issues for courts and supports in this function also companies and investors. As a member of the advisory board of Value Trust S.E. and the scientific advisory board of the Federal Association of German Equity Investment Companies in Germany, Prof. Schwetzler maintains close contact with the practice of company valuation and company transactions.

Dr. Maximilian Schreiter is onderzoeksassistent en promovendus aan de leerstoel Financieel Management aan de Hogeschool van Leipzig (HHL). Zijn onderzoeksgebied is de toepassing van echte optietheorie bij het optimaliseren van financierings- en investeringsbeslissingen, evenals bij bedrijfswaardering. Voordat hij bij HHL kwam, werkte hij voor Roland Berger Strategy Consultants. Gedurende deze periode adviseerde hij consumentengoederen en retailbedrijven in Midden- en Oost-Europa en West-Afrika bij verschillende projecten.

De kosten voor deelname als NiRV-lid bedragen € 300,- per persoon excl. BTW. Overige deelnemers, geen lid van het NiRV, betalen € 400,- per persoon excl. BTW.

Voor deelname aan deze workshop worden 3 PE punten toegekend aan Register Valuators.