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On average, according to Mercer Consulting, a British company's chief executive makes one-third of what a comparable company in the United States would pay its boss.
The key components of a comparable company analysis are the Debtor's EBITDA (i.e., earnings before interest, taxes, depreciation and amortization) and the selection of an appropriate multiple to apply to the EBITDA to arrive at enterprise value.
Hotchkiss testified that a comparable company analysis for companies emerging from chapter 11 should use the first year's projected EBITDAR because the historical EBITDAR does not reflect any of the benefits from the debtor's restructuring.
"On average, an ousted C.E.O.'s company achieves only half the profit, cash flow, and market capitalization of a comparable company led by an effective C.E.O. for the same length of time".
The low end estimate uses Symantec as a comparable company.
In other words, they would deem it fair that their CEO and senior executives make what anyone else at a comparable company is making.
Similar(52)
The third value was the equity value of Minera derived from a comparable companies analysis using the companies identified by Goldman.
Five apparently used the income method only, two used DCF and asset value, and one used a single comparable company (the Court did the same in that case).
Similarly, a company with two or three operating locations faces more complex management problems, and hence is farther up the scale than an otherwise comparable company with one operating unit.
Guardian Money checked out a few comparable companies.
Therefore, for the reasons discussed above regarding the comparable company analysis, a straightforward application of the multiple derived from Newman's comparable transactions before his adjustment should be applied here.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com