FNCE 251 Lecture Notes - Lecture 11: Stock Dilution, Initial Public Offering, Bell State

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7 Dec 2016
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Dividend recapitalization = half ipo: how dividend recapitalization works: if you sit on your assets over time, your irr will continue to decrease. Once you start to give money back to your investors, your irr will actually increase: also helps you take the risk out- if you pay yourself (cid:373)illio(cid:374) di(cid:448)ide(cid:374)d out of (cid:1004)(cid:1004)m (cid:448)alue, (cid:455)ou"(cid:396)e ga(cid:373)(cid:271)li(cid:374)g (cid:455)ou(cid:396) own money. Ebitda was around b in 2010, compared with estimate of less than b. While they waited for ipo market to open up, they were taking their money out, helping them reduce their risk and increase their irr. Do this analysis at time of purchase: effects of health care reform on hca: medicare/medicaid payments cuts, extended (and mandatory) health insurance, any effect is likely to kick in at about 2014. Eventually, hca sold . 2m shares for each. They exited at about b. it turned out to be a very good deal.

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