Investigation Body Temperature Regulation Free Essays

Examination: Body temperature guideline Guiding inquiry: To what point does hide decide an ice foxes prosperity in the wild and how much insurance against extraordinary temperatures does it truly offer. Presentation: In this trial I will endeavor to legitimize my discoveries that I have accumulated throughout a couple of various tests. What I have been gathering data over is the reasonableness of a cold foxes fur garment. We will compose a custom article test on Examination: Body Temperature Regulation or on the other hand any comparable theme just for you Request Now I have approached discovering this out by reenacting a model of an ice foxes fur garment through many difficult and distressing conditions. The manner in which I did so was by right off the bat separating the tests into three distinct advances. The initial step involved me endeavoring to place my model ice fox in below zero temperatures, as it would be, in actuality. What I did anyway was to placed two models in the ice chest. The principal was a basic test tube secured with cotton, while the second had a space of cool air between the hide and the test tube reproducing the space that would be made when a fox puffs out its hide practically like when we get goose bumps. The subsequent trial was intended to flag whether it transforms anything to the temperature of my two test tubes if there is wind or not. I additionally did that equivalent investigation of wind with my test tubes both doused with water, again this would reproduce a genuine circumstance, for example, downpour and wind or even day off wind. In conclusion I chose to put my test cylinders (or cold foxes! ) at typical room temperature to decide how much the tests truly influenced the temperatures, along these lines I could perceive what precisely was going on in standing of the cooling bend. Theory: I anticipate that the accompanying test should give me an unpleasant enough thought of cold foxes defensive measures and to assist me with bettering comprehend the full degree of their warmth holding capacities. I expect that my investigation has a lot of defects yet I additionally accept that there will be sufficient crude information to precisely decide a positive outcome. A positive outcome would be one that precisely offers me a thought of how to response my controlling inquiry. If I somehow managed to be increasingly explicit I would state that as I would like to think the test tube with the sight-seeing trapped between the cotton and the genuine test cylinder will have no effect over the one with just cotton around it. I base this upon the hypothesis that the air temperature between the test tube and the cotton will rapidly free any of its warmth and will get repetitive. I can demonstrate this by proceeding with the trials I have intended to decide only that. In conclusion I likewise accept that when I will stand up to the consequences of my two investigations, the one with just the fan and the other with the fan and the wet cotton I will find that the later will be substantially more powerless to the cold and its temperature will diminish significantly more, because of the water that will choke its capacity to hold heat. Mechanical assembly: * Two test containers of equivalent measurements * Cotton fleece to reenact hide on a cold fox * Pieces of wood that make a space of air between the cylinder and the fleece * Timer to precisely give me a period length for which to lead my trial * Fan to mimic breeze * Thermometer to put inside test tube which will precisely compute the temperature of the water held inside it. * Kettle to heat up the water before putting it inside the test tube * Selotape to keep the cotton set up Fridge to reproduce the below zero temperatures that cold foxes should live through Evaluation of mechanical assembly: I feel that the contraption that I utilized are for the most part amazingly great and successful with a couple of key special cases. Right off the bat the cotton isn't exactly a similar material as the hide that an ice fox utilizes, implying that the investigation won't be consistent with reality. It will just give me an unpleasant thought of the ideas of warmth guidelin e inside this specific types of creature, however that will be sufficient to respond to the directing inquiry. Another bit of device that doesn't coordinate precisely my prerequisites is the fan seeing as it just delivers a specific measure of wind and in just a single bearing implying that I should consistently turn my test tube so as to keep the trial reasonable and equivalent. Analysis one: In this examination I will put my test tube’s at room temperature so as to decide before beginning different investigations what the cooling bend would be without it being gotten through any strange conditions. As should be obvious through the charts over the temperature diminishes gradually from the underlying 70 degree beginning temperature. What happens is that test tube one and two gradually begin to disengage structure one another, seeing as test tube one holds heat all the more viably. I will presently observe whether the outcomes will be radically unique with my different tests. I have additionally seen that the test tube 1 has a more noteworthy warmth holding capacity that likely could be because of the layer of air held among it and the test tube. To additionally demonstrate this hypothesis I should proceed with my different tests. Analysis two: In this trial I have put my two test tubes inside the ice chest so as to recreate the below zero cools. In my speculation I said that I thought there would be no distinction between test tube one and two. In the principal test it was demonstrated something else, yet in the accompanying analysis there will be a more noteworthy temperature change so the distinctions in temperature will turn out to be progressively clear over the long haul. As should be obvious in the accompanying diagram there is a substantially more huge contrast between test tube one and test tube two. This shows so far the space of sight-seeing between the cotton fleece and the test tube is starting to work substantially more adequately. This is totally against what I at first said in my theory, where I plainly expressed I figured It would have no effect. In any case in the event that you take a gander at this social occasion of data you can see that the outcomes begin to isolate from one another substantially more essentially than the principal test this shows the more uncommon the temperature the more it assists with having that layer of tourist to secure and keep the ‘arctic fox’ warm. Test three: This is the most significant examination, as I would see it to decide to what degree an ice foxes hide assists keep with excursion the virus. This is on the grounds that I will keep the test tubes at room temperature while setting a fan before it to reproduce wind and the virus wind that accompanies that. It isn't as intense as my past trial yet it is similarly as significant. I hope to get results that are of a higher temperature than the last analysis, yet I additionally expect the distinction between the two test cylinders to build seeing as test tube 2 is greatly improved equipt against this sort of warmth and temperature contrast. Step by step instructions to refer to Investigation: Body Temperature Regulation, Papers

Contribution of Occupational Psychology Theories in the Management Essay

Commitment of Occupational Psychology Theories in the Management - Essay Example The paper advises that word related brain research ordinarily attempts to create and improve the degrees of occupation fulfillment that representatives get. This is by thinking of inspirational strategies or arrangements that an association ought to embrace. Word related brain research additionally helps in expanding the degrees of efficiency inside an establishment. This is on the grounds that it helps in advancing development, which is a fundamental prerequisite for any association to build the degrees of its exhibition. Without development, it is hard for an association to fulfill the different needs of its objective clients. This is on the grounds that, through advancement, an organization or an association would figure out how to create items that fulfill the different needs of its clients. Different issues of worry by word related speculations respect the physical and psychological well-being of these representatives. For any association to get the best from its laborers, it mu st guarantee that these individuals are truly and intellectually sound. An association would accomplish this target by making great working conditions and looking for strategies for dispensing with worry at the work environment. One of the significant hypotheses of word related brain science is the hypothesis of populace nature. The word related brain research hypothesis of populace nature centers around the effect of dynamic changes in an association, which are achieved by the rise or breakdown of the association viable. This hypothetical structure means that populace nature is concentrated over an exceptionally significant stretch of time. Most associations typically have static structures, and these static structures assume a job in frustrating their adjustment to changes. In view of these realities, these associations have a high possibility of neglecting to accomplish their targets and points. Nonetheless, new business associations that have developed would thrive in light of t heir adaptability, and their wants to adjust to changes.

Bad Credit Helper How To Shop For a Credit Counselor

Bad Credit Helper How To Shop For a Credit Counselor Bad Credit Helper: How To Shop for a Credit Counselor Bad Credit Helper: How To Shop for a Credit CounselorIt can be a vicious cycle. A financial hardship hurts your credit, your bad credit creates financial hardship, and on and on it goes. So whats the solution?A professional credit counselor could you help you find your way out of this nightmare. But, as with any major financial decision, choosing the right credit counselor should be done carefully.In many ways, shopping for a credit counselor is a lot like shopping for a bad credit lender. While there are many respectable credit counselors out there who will keep your best interest in mind, there are still a number of not-so-respectable organizations that are just trying to make a quick buck (off of you!).Think of those organizations as the payday lenders of credit counseling. And just like payday lenders, they should be avoided at all costs!That’s why we asked three credit counseling experts for advice on how best to shop around for a credit counselor.(If you want to know more abo ut the basics of credit counseling, then check out our post: Do You Need Credit Counseling?)Look for the warnings signs.Its unfortunate but true: If you have bad credit, low income, or are otherwise in a financially dangerous situation, there are predatory organizations out there looking to take advantage of you. You can learn more about predatory lenders in our ebook How to Protect Yourself from Payday Loans and Predatory Lenders.So how can you tell the difference between the legitimate credit counselors and the scammers?Gary Herman, President of Consolidated Credit Counseling Services  warns that customers should, “Be cautious of any agency that charges an upfront fee for the initial debt evaluation.”“You should also proceed with caution if the credit counselor attempts to push you into a debt management program without fully informing you of the other debt relief options available,” says Herman.“If the fees exceed $79 per month, it’s definitely not legit because that exceeds all state regulations.”According to Mike Sullivan, a personal finance consultant with national nonprofit credit counseling and debt management agency Take Charge America, says upfront payments may be common with housing counseling, student loan counseling and even investment counseling, but that “it should be a warning sign with credit counseling.”“Another warning sign,” says Sullivan, “is an offer to put a consumer on a debt management plan (DMP) without at least a 20-minute discussion and analysis.”“It may well take an hour or more to determine if a DMP is the best solution, but a counselor anxious to get to the business transaction is not putting the consumers concerns first.”Katie Ross, Education and Development Manager for American Consumer Credit Counseling, or ACCC, adds that “any agency that promises to repair your credit is a red flag that they are less than reputable.   No agency can promise this.”What kind of research should you do?Before you start your work with a credit counselor, you should definitely do your research. That way, the odds that you’ll end up working with a less-than-reputable organization are drastically lowered.According to Sullivan, “There are many factors to consider in selecting an agency, such as nonprofit status, counselor certification and state licensing.”He recommends that you “Choose an accredited agency, such as Take Charge America, to ensure the agency employs the best possible business practices (mission and purpose, quality assurance, governance and administration, service environment, financial management, ethics and confidentiality, service delivery).“Visit the National Foundation for Credit Counseling (NFCC) at NFCC.org to find a list of accredited agencies to ensure compliance with best-practice standards.“You can also start with the Better Business Bureau and find credit counseling agencies in your area that have A+ ratings and can ask if they are members of NFCC. Of cour se, not every good credit counseling agency is a member of NFCC and not every member agency can be the best, but it is a good place to start.”According to Ross, the kinds of research that one should conduct before working with a credit counselor include “understanding exactly what the agency is offering and make sure they can help you with your financial issues,” reading the fine print of the agreement, getting everything in writing, and “contacting your creditors and see if they are familiar   with a particular agency offering this type of service.”If your first contact with a credit counselor is over the phone, Herman recommends that you check and make sure that “the person you’re speaking with is a certified credit counselor and not a customer service representative.”When it comes to specific criteria you should be looking for, Ross has a very helpful list:Be sure the agency is charging you reasonable fees (not more than $50/month for a debt management plan), but this can vary by state.The credit counseling agency should be non-profit.The agency should have been in business for at least seven to ten years.The counselors at the credit counseling agency should be certified by an independent organization.The agency should be accredited by the International Standards Organization (ISO) or by the Council on Accreditation (COA).The agency should be a member of one of the trade associations: either Financial Counseling Association of America (FCAA) or the National Foundation for Credit Counseling (NFCC).Consumers should consider checking with the Better Business Bureau for any consumer complaints made against the agency.The agency you are considering should be licensed and bonded to do business in your state.The agencys willingness to waive the fees if you simply cant afford them.The agency should spend a reasonable amount of time for your consultation/budgeting session. At least an hour is needed.The agency should provide you with a written budget based on your personal financial situation.And lastly, the agency should be willing to offer free education to help you learn how to manage your finances. They should also provide ongoing education while in a debt management plan or even if you decided a DMP is not for you.Consider some DIY financial solutionsWhile credit counseling is a great financial solution for many people, it is by no means your only option. In fact, much of the work you do with a credit counselor is work that you can do yourself at home.Of course, it helps to have a professional working it through with you. But with a little determination and a whole lot of perseverance, you can tackle most financial problems yourself.There is very little a credit counseling agency does that a consumer could not do alone,” says Sullivan. “Every consumer could create a budget, analyze cash flow, prioritize payments, negotiate credit card terms and institute a plan for getting out of debt in five years or less.”Unfortuna tely, most consumers will not do all this by themselves, but just having a written budget and monitoring expenses for sixty days goes a long way toward taking control of your financial health.Herman agrees. “If a household has cash flow available in their budget, they can implement a debt reduction plan on their own,’ he says. “You use your extra cash to pay off one debt at a time as quickly as possible, typically starting with the debt that has the highest APR first.”“Consumers can also call their creditors individually to negotiate lower interest rates, which can make it easier to pay back a debt. In addition, there are several options for do-it-yourself debt consolidation, such as credit card balance transfers and personal debt consolidation loans.”Lastly, there’s one piece of advice that Herman says is most important of all: “Having ten percent of your take home pay deducted from your check and put into a separate savings account will eventually make you successf ul.”“The key to financial success is really saving; debt is just the way non-savers deal with expenses,” he says.Do you have experience with credit counseling? Did you find it helpful? We’d love to hear from you! You can get in touch with us on Twitter at @OppLoans.Visit OppLoans on YouTube | Facebook | Twitter | LinkedINContributorsGary Herman, President of Consolidated Credit Counseling Services Inc. (@ConsolidatedUS), is a consumer credit specialist and an AFCPE Certified Credit Counselor. He has been a part of Consolidated Credit for over 20 years and his expertise in establishing operations and marketing policies, hiring, and training financial counselors, has been a crucial advantage in Consolidated Credit’s success. As an expert who examines consumer credit trends, causes and effects of financial over-extension, Mr. Herman has been able to predict the needs of financially burdened consumers and provide Consolidated Credit’s certified counselors with the tools and educational materials required to keep ahead of the public’s needs.Katie Ross joined the American Consumer Credit Counseling, or ACCC, management team in 2002 and is currently responsible for organizing and implementing high-performance development initiatives designed to increase consumer financial awareness. Ms. Ross’s main focus is to conceptualize the creative strategic programming for ACCC’s client base and national base to ensure a maximum level of educational programs that support and cultivate ACCC’s organization.Mike Sullivan is a personal finance consultant with Take Charge America (@TCAsolutions), a national nonprofit credit counseling and debt management agency. He has more than 25 years of experience educating consumers about a wide range of budgeting, credit, debt and saving issues, and was instrumental in building Take Charge America’s financial education department and community initiatives. More at takechargeamerica.org.

Essay on Ticcing Away Tourette Syndrome - 3162 Words

nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;â€Å"Tourette Kids† Sometimes we are happy Sometimes we are sad Sometimes we get teased Sometimes we get mad Although we seem different When tics appear each day Remember this disease chose us And no the other way So if we jerk, or yell, or swear Please try not to forget It isn’t us doing it But a disease called Tourette ----Jason Valencia---- Touretter 1986, 10 years old Living with Tourette syndrome gives a deeper insight to the highly misunderstood and understated disease, Gilles de la Tourette syndrome. The book delves into the origin of the disease, the symptoms, the medications, and the treatments. Then the author gives thoughtful advice, a guide, so to speak, for†¦show more content†¦TSA is not a psychological illness or psychosis. The disease is biochemicall6y base4d and is genetically transferred, that is, a person is born with it, and it is not contagious. (Shimberg, 1995, p.81) TS is characterized by repetitive, sudden, and involuntary movements. Although there is no known medical, biological, or psychological test to diagnose Tourette Syndrome, specific guidelines were compiled in the 1980’s by the American Psychiatric Association. According to the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders, also known as DSM-IV, five symptoms must be present. 1. Both multiple motor and one or more vocal tics must have been present at some time during the illness, although not necessarily concurrently. A tic is defined as a sudden, rapid, recurrent, non-rhythmic, motor movement or vocalization. 2. The tics occur many times a day, usually in bouts, nearly every day or intermittently throughout a period of more that one year. During this period, there must have never been a tic-free period of more than three consecutive months. 3. The disturbance caused marked distress or significant impairments in social, occupational, or other important areas of functioning. 4. The onset of the disease’s symptoms occurs before the age of eighteen, and 5. The disturbance is not due to the direct

Whats Eating Gilbert Grape- Review and Critique - 2227 Words

What’s Eating Gilbert Grape. Film review and critique. Society’s ideological constructs and attitudes towards minority groups are created and reinforced through media imagery. Although negative associations that maintain inequities with regard to race, gender and homophobia (Conner Bejoian, 2006) have been somewhat relieved, disability is still immersed in harmful connotations that restrict and inhibit the life of people with disabilities in our society. Disability has appeared frequently in recent films (Byrd Elliot, 1988), a reflection of society’s interest in the subject. These films often misrepresent disability using stereotypes. These stereotypes reinforce negative and incorrect social perceptions of, and attitudes towards,†¦show more content†¦Whenever he tries to escape (usually to the water tower), he is ultimately returned back to this position of subordination under the care of others, which is typical of this stereotype (Hayes Black, 2003). A most common stereotype depicted of disabled characters is that of a ‘super-man’ (Safran, 2000) or ‘supercrip’ (Harnett, 2000), where a disabled character overcomes massive odds to beat or succeed in defeating their disability to become ‘normal’. The character is often seen as a hero to have made such progress. Although Arnie does not reflect a hero status, his character is beating his disability by the very fact that he is still alive. In the opening scenes of the movie, Gilbert’s narration lets the audience know that â€Å"doctors said we’d be lucky if Arnie lived to be ten, well ten came and went† (Matalon, Ohlsson, Teper Hallstrà ¶m, 1993), implying Arnie’s ‘triumph over tragedy’. He defies death that would be otherwise be brought about by his disability. Although not a thematic stereotype reinforced throughout this whole film, it is typical of a disabled character to be represented as a victim or object of violence (Safran, 2000). At the climax of the film, Gilbert’s overwhelming frustration and anger of his life situation overflows into a violent episode directed at Arnie. On occasions throughout the film, Arnie is portrayed as an innocent a victim or object of violence from hisShow MoreRelatedProject Mgmt296381 Words   |  1186 PagesCritical chain method Chapter 9 Chapter 10 Reducing Project Duration Leadership Chapter 2 Organization Strategy and Project Selection 1.4 Projects and programs (.2) 1.4.1 Managing the portfolio 1.4.3 Strategy and projects 2.3 Stakeholders and review boards 12.1 RFP’s and vendor selection (.3.4.5) 11.2.2.6 SWAT analysis 6.5.2.7 Schedule compression 9.4.2.5 Leadership skills G.1 Project leadership 10.1 Stakeholder management Chapter 11 Teams Chapter 3 Organization: Structure and

Gemstone and Diamond Mining Through the Years Free Essays

Gemstones have been a symbol of wealth from the ancient times up to the present. These stones with their own characteristic, unique and special properties have always been associated to beauty too. Popular and famous persons throughout history, especially those from the noble family have used gemstone to adorn not only themselves but their dwellings as well. We will write a custom essay sample on Gemstone and Diamond Mining Through the Years or any similar topic only for you Order Now In the United States, mining of these stones has been for recreational activity only for collectors and hobbyists since 1935 (Gemstones Production, USGS). Nevertheless, as the value of gemstones inflated, large scale mining operations have been initiated. In this paper, we would explore the world of gemstones; what truly fits the word gemstone, how are they classified and the methods of mining. Gemstones The word â€Å"gem† actually came from the Latin word gemma, which means â€Å"bud† (Microsoft Encarta). It is a very fitting name since gems seem to bud out of the earth’s crust like flowers in a garden. Gem or gemstone means any mineral or organic material that can be used to decorate one’s body, for display or can be considered an object of art due to its unique properties it possesses such as beauty, rarity and durability. Colored and diamond gemstones are subcategories of gemstones. Basically, colored gemstones are all other stones except diamond such as amber, coral and shell (Olson 32.1). On the other hand, natural gemstones are minerals, stones or any organic matter that can be cut, polished, or treated for use as jewelry or other personal ornament (Gemstones Terms, USGS). Gemstones can be further classified as precious or semiprecious gemstones. Precious gemstones have beauty, durability and rarity, while semiprecious gemstones have only one to two of these characteristics (Gemstones Terms, USGS). Diamond, ruby, sapphire, emerald, aquamarine, topaz and opal are classified as precious gemstones while others are treated as semiprecious (Gemstones Terms, USGS). Since gemstones are rare, they are not plentiful and these stones do not form ores like other mining products. They tend to be scattered throughout a large body of rock or can be crystals found on small cavities of rocks (Gemstones Environment, USGS). Gemstones are primarily found from Tennessee, Alabama, Arkansas, North Carolina, Oregon and Arizona (Gemstones Specialist 64). However, most gem diamond reserves are not found in the United States. Diamonds are usually mined from Southern Africa, Russia, and Western Australia (Gemstones Specialist 65). The very first used as jewelry were amber, amethyst, coral, diamond, emerald, garnet, jade, lapis lazuli, pearl, rock crystal, ruby, serpentine and turquoise (Olson 32.1). In the US, the commercial gemstone industry consists of individuals and companies that mine gemstones or harvest shell and pearls, firms that manufacture synthetic gemstones and individuals and companies that cut natural and synthetic gemstones (Olson 32.1). Worldwide, the industry is only composed of two sectors: diamond mining and marketing and the production and sale of colored gemstones (Olson 32.3). Throughout the year, few of the diamonds mined are of gem quality; much of them are of near-gem and industrial in quality. Gem quality diamonds display high standards of excellence in quality and can be sold as jewelry. Clarity of such diamonds is from flawless through to visible inclusions. On the other hand, near-gem quality represents diamonds that fall between gem and industrial quality and thus can be used for either purpose.   Clarity of this set is from visible inclusions to industrial. Lastly, industrial quality diamonds are of low quality and cannot be used as jewelry or adornment. These diamonds are suitable only for industrial use such as dentist’s drills and earthmoving equipment (Mining Diamonds). Diamonds are formed beneath the earth’s surface and required tremendous pressure and temperature. Like diamonds, most gems are crystals formed by cooling hot gases, solutions, and melts. As the earth’s soil surface weathers and erodes, and rivers forcefully flow through, gemstones may be exposed and be unearthed where one can even simply bend over the riverbank and pick them up (Microsoft Encarta). Mining One of the two primary industries of early civilization is mining. Like agriculture, it is one of humankind’s earliest endeavors (Introduction to Mining 1). In 3400, Egyptians in Sinai did the first ever-recorded mining where they have found turquoise (Introduction to Mining 7). Usually, gemstones are excavated at the surface. However, through the years, underground mining especially for diamonds have been developed. Unlike surface mining, underground mining is more complicated and expensive. It involves the efficiency, safety and permanence underground (Introduction to Mining 11). Mining is the process of obtaining useful minerals from the earth’s crust. Its process requires excavations in underground mines and surface excavations in open pit or open cut mines. Thus, it involves physical removal of rock and earth to acquire gems and other important minerals. (Microsoft Encarta). Mining consists of four stages. These stages are prospecting or search for mineral deposits, exploration or the work included in evaluating the extent of economic value of the deposit, innovation or the work of preparing access to the deposit so that the minerals can be extorted from it and exploitation which is the process of extracting the minerals (Microsoft Encarta). Methods of Mining There are several methods of mining. For gemstones, they are usually obtained on rivers and shores. However, there are also other ways of obtaining them in large scale mining operations. Exploitation methods can be classified into two categories based on setting which are surface and underground mining. Surface mining operations consists of mechanical excavation techniques such as open pit and open cast or strip mining. There are also aqueous methods such as placer mining and solution mining. On the other hand, underground mining is usually categorized into unsupported, supported and caving methods (Introduction to Mining 11). Placer mining involves excavating loose or alluvial such as sand and gravel. The sought after gems are separated from the sand or gravel by a series of screens, jigs and sluices. This type of mining is usually used for diamonds and rubies (Microsoft Encarta). At present, surface mining involves production of blastholes 3-15 inches in diameter by rotary or percussion drills for the placement of explosives in order to remove consolidated rock. The explosives are then inserted and detonated. The material then is loaded and hauled for transport (Introduction to Mining 15). Diamond Mining Diamonds are mined by pipe or alluvial methods. In pipe mining, extraction of diamonds is done from volcanic pipes. Unlike other gems, diamonds are usually found underground and on volcanic rocks and lands. In diamond pipe mining, large areas are exploited wherein an average of 250 tons of volcanic rock is mined just to produce a one-carat gem quality polished diamond (Mining Diamonds). Due to this intricate and costly process, diamonds are really rare and precious. Diamond pipe mines are composed of kimberlite material called blue ground. At the start, kimberlite is dug from the surface by rough opencast mining. Nevertheless, as the surface deposits are exhausted, pipe mining is employed by sinking shafts into the ground at the edge of pipes and tunnels are driven into the deeper parts of the pipes. By doing so, diamond-bearing rock is excavated and is then transported for screening (Mining Diamonds). Another method of diamond mining is alluvial mining. In this method, diamonds are extracted from riverbeds or ocean beaches. It is true that diamonds are made inside volcanic pipes and lands, however, millions of years allowed that some of the diamonds formed are weathered out of the volcanic pipes and carried to great distances by rivers and oceans. Thus, the process of alluvial mining involves building a wall that holds back the surf. About 25 meters of sand is demolished aside to reach the diamond-containing level in the ocean and riverbeds. The diamond-containing sand is then acquired and transported to screening plants (Mining Diamonds). In screening plants, diamonds with kimberlite are cleaned and purified. Separation of the diamonds from the kimberlite ore involves a process much like the panning of gold. The kimberlite ore is put into large funnels along with a heavy fluid and is then, mixed in a rotating manner. Since diamonds are heavier than the other materials from which it is mined, they sink into the bottom of the funnels and spill out. After this process, the diamond is almost free from other waste (Mining for Diamonds). Diamonds can then be washed on shaking grease-covered tables. Uncut diamonds then adhere to the grease while the other fragments of waste ore are vibrated past and are discharged to tailings pile. The tables are then scraped for diamonds in the grease and then are boiled to melt the grease and separate the diamonds (Microsoft Encarta). Finally, these diamonds are separated into different grades or quality as industrial, gemstone or near-gem grades. After-Mining Operations Rough uncut diamonds do not actually look attractive. Such diamonds are needed to be cut and polished before anyone can see their beauty and relevance in personal adornment and jewelry. The process of cutting and polishing originated in India where Indian natives discovered a way to make rough diamonds glisten by simply grinding another diamond against it (Mining Diamonds). Diamonds are known for their hardness, no material has ever been found which is capable of cutting diamond until the Indians found out that diamonds could actually be cut and polished by diamonds. The process of cutting and polishing typically lasts for several hours to several months. After which, the diamond will turn out lighter for at least half of its original weight (Mining Diamonds). Diamonds are first carefully examined before cutting. Diamonds are popularly cut into round brilliant since this shape gives the greatest possible brilliance with the minimal weight loss. Cutting uses an instrument similar to grinders. This cutting instrument is made of a paper-thin metal disc coated with diamond dust revolving at a fast speed. Lasers can also cut diamonds nowadays. The corners of the diamonds are then rounded by grinding another diamond producing some dust that can later be used in polishing. Diamonds are then polished to make them sparkle brighter. The diamond dust from the cutting is placed on a turntable made of iron and oiled. The cut diamond is then grinded against the turntable until it sparkles beautifully (Mining Diamonds). Conclusion Gemstones are treasures not only of powerful people but also of mighty and ancient civilizations. As humankind became civilized, gemstones such as diamonds and sapphires became symbols of prosperity and elegance. Their crystalline structure, the rarity, and the arduous process of mining them have lived up to their symbolism throughout the years and continue to do so. Works Cited â€Å"Gemstones Environment.† 18 June 1997. United States Geological Surveys, USGS. 30 April 2008 http://pubs.usgs.gov/gip/gemstones/environment.html.   Ã¢â‚¬Å"Gemstones Production.† 18 June 1997. United States Geological Surveys, USGS. 30 April 2008 http://pubs.usgs.gov/gip/gemstones/production.html. â€Å"Gemstones Terms.† 18 June 1997. United States Geological Surveys, USGS. 30 April 2008 http://pubs.usgs.gov/gip/gemstones/terms.html. â€Å"Gemstones†. Gemstones Specialist (703) 648-7721, Mineral Commodity Summaries, January 1996. USGS. 30 April 2008 http://minerals.usgs.gov/minerals/pubs/commodity/gemstoned/gemstmcs96.pdf. â€Å"Introduction to Mining.† 30 April 2008. http://media.wiley.com/product_data/excerpt/11/04713485/0471348511.pdf. â€Å"Mining.† Microsoft Encarta 2007. 1993-2006 Microsoft Corporation. CD-ROM. â€Å"Mining Diamonds†. 30 April 2008 http://work/gemstones/Mining Diamonds.htm. â€Å"Mining for Diamonds.† 30 April 2008 http://work/gemstones/Mining for Diamonds.htm. Olson, Donald. â€Å"Gemstones.† USGS 2000 Yearbook. USGS. 30 April 2008 http://minerals.er.usgs.gov/minerals/pubs/commodity/gemstones/gemstmyb00.pdf How to cite Gemstone and Diamond Mining Through the Years, Essay examples

Psychodynamic Theory free essay sample

Many psychologists have proposed theories that try to explain the origins of personality. One highly influential set of theories stems from the work of Austrian neurologist Sigmund Freud, who first proposed the theory of psychoanalysis. Collectively, these theories are known as psychodynamic theories. Although many different psychodynamic theories exist, they all emphasize unconscious motives and desires, as well as the importance of childhood experiences in shaping personality. Sigmund Freud’s Theory of Psychoanalysis In the late 1800s and early 1900s, Freud developed a technique that he called psychoanalysis and used it to treat mental disorders. He formed his theory of psychoanalysis by observing his patients. According to psychoanalytic theory, personalities arise because of attempts to resolve conflicts between unconscious sexual and aggressive impulses and societal demands to restrain these impulses. The Conscious, the Preconscious, and the Unconscious Freud believed that most mental processes are unconscious. He proposed that people have three levels of awareness: The conscious contains all the information that a person is paying attention to at any given time. We will write a custom essay sample on Psychodynamic Theory or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Example: The words Dan is reading, the objects in his field of vision, the sounds he can hear, and any thirst, hunger, or pain he is experiencing at the moment are all in his conscious. * The preconscious contains all the information outside of a person’s attention but readily available if needed. Example: Linda’s telephone number, the make of her car, and many of her past experiences are in her preconscious. The unconscious contains thoughts, feelings, desires, and memories of which people have no awareness but that influence every aspect of their day-to-day lives. Example: Stan’s unconscious might contain angry feelings toward his mother or a traumatic incident he experienced at age four. Freud believed that information in the unconscious emerges in slips of the tongue, jokes, dreams, illness symptoms, and the associations people make between ideas. The Freudian Slip Cathy calls up her mother on Mother’s Day and says, â€Å"You’re the beast, Mom,† when she consciously intended to say, â€Å"You’re the best, Mom. According to psychoanalytic theory, this slip of the tongue, known as a Freudian slip, reveals her unconscious anger toward her mother. The Id, the Ego, and the Superego Freud proposed that personalities have three component s: the id, the ego, and the superego. * Id: a reservoir of instinctual energy that contains biological urges such as impulses toward survival, sex, and aggression. The id is unconscious and operates according to the pleasure principle, the drive to achieve pleasure and avoid pain. The id is characterized by primary process thinking, which is illogical, irrational, and motivated by a desire for the immediate gratification of impulses. * Ego: the component that manages the conflict between the id and the constraints of the real world. Some parts of the ego are unconscious, while others are preconscious or conscious. The ego operates according to the reality principle, the awareness that gratification of impulses has to be delayed in order to accommodate the demands of the real world. The ego is characterized by secondary process thinking, which is logical and rational. The ego’s role is to prevent the id from gratifying its impulses in socially inappropriate ways. * Superego: the moral component of personality. It contains all the moral standards learned from parents and society. The superego forces the ego to conform not only to reality but also to its ideals of morality. Hence, the superego causes people to feel guilty when they go against society’s rules. Like the ego, the superego operates at all three levels of awareness.

Free Essays on The House Of Mirth

The novel, The House of Mirth, by Edith Wharton, is centered around the young Lilly Barton as she tries to rise in society and marry rich. Lilly Bart is an attractive woman but she is still not married at age 29. Ever since her mother died Lily began to live with her aunt, Mrs. Peniston. Although she is living at Mrs. Peniston’s house, Lily spends much of her time staying at the Bellomont, the large estate of Gus and Judy Trenor. Judy regularly throws huge, extravagant parties for New York’s upper-echelon in society. At these parties, most of the women play Bridge, which ends up costing Lilly a great deal of money, since she is unlucky and terrible at the game. Even though she always ends up losing money and has no constant stream of income, Lilly always manages to play. Throughout The House of Mirth, there are two constant underlying themes: wealth and marriage. Sadly, Lilly seems to miss out on many things because of her fanaticism with both. When it comes to marriage, it seems as though Lilly cares less about the kind of person he is and only cares about a man’s money and place in society. In Book One, Lilly decides that she wants to marry Percy Gryce, even though she clearly states that she thinks he is incredibly boring. Unfortunately, the one man Lilly actually loves, Lawerence Selden, does not have enough money for her to marry him. While at the Bellmont, Lilly learns about the stock market and decides that she would like to get involved in an investment. She asks Gus Trenor to invest a very small amount, different from what he is used to dealing with, for her. Gus agrees enthusiastically because he has, for lack of a better word, a â€Å"crush† on Lilly and is willing to do anything to spend time with her. The stock market pays off for Lilly and she now has a steady income. The money does not last long, though, as she spends it lavishly on clothing and other items. Later, Lilly learns that Trenor has not been ... Free Essays on The House Of Mirth Free Essays on The House Of Mirth The novel, The House of Mirth, by Edith Wharton, is centered around the young Lilly Barton as she tries to rise in society and marry rich. Lilly Bart is an attractive woman but she is still not married at age 29. Ever since her mother died Lily began to live with her aunt, Mrs. Peniston. Although she is living at Mrs. Peniston’s house, Lily spends much of her time staying at the Bellomont, the large estate of Gus and Judy Trenor. Judy regularly throws huge, extravagant parties for New York’s upper-echelon in society. At these parties, most of the women play Bridge, which ends up costing Lilly a great deal of money, since she is unlucky and terrible at the game. Even though she always ends up losing money and has no constant stream of income, Lilly always manages to play. Throughout The House of Mirth, there are two constant underlying themes: wealth and marriage. Sadly, Lilly seems to miss out on many things because of her fanaticism with both. When it comes to marriage, it seems as though Lilly cares less about the kind of person he is and only cares about a man’s money and place in society. In Book One, Lilly decides that she wants to marry Percy Gryce, even though she clearly states that she thinks he is incredibly boring. Unfortunately, the one man Lilly actually loves, Lawerence Selden, does not have enough money for her to marry him. While at the Bellmont, Lilly learns about the stock market and decides that she would like to get involved in an investment. She asks Gus Trenor to invest a very small amount, different from what he is used to dealing with, for her. Gus agrees enthusiastically because he has, for lack of a better word, a â€Å"crush† on Lilly and is willing to do anything to spend time with her. The stock market pays off for Lilly and she now has a steady income. The money does not last long, though, as she spends it lavishly on clothing and other items. Later, Lilly learns that Trenor has not been ...

Leísmo and the Use of Le in Spanish

Leà ­smo and the Use of 'Le' in Spanish Do you always follow the rules of proper English in your speaking and writing? Probably not. So it probably would be too much to ask native Spanish speakers to do the same. And thats especially true when it comes to using pronouns such as le and lo. When it comes to breaking the rules of Spanish - or at least of varying from standard Spanish - there are probably no rules that are broken more often than those involving third-person object pronouns. The rules are broken so often that there are three common names for variations from whats considered normal, and the Spanish Royal Academy (the official arbiter of what is proper Spanish) accepts the most common variation from the norm but not others. As a Spanish student, youre normally best off learning, knowing and using standard Spanish; but you should be aware of variations so they dont confuse you and, ultimately, so you know when its OK to deviate from what you learn in class. Standard Spanish and Objective Pronouns The chart below shows the third-person objective pronouns that are recommended by the Academy and are understood by Spanish speakers everywhere. Number and gender Direct object Indirect oject singular masculine ("him" or "it") lo (Lo veo. I see him or I see it.) le (Le escribo la carta. I am writing him the letter.) singular feminine ("her" or "it") la (La veo. I see her or I see it.) le (Le escribo la carta. I am writing her the letter.) plural masculine ("them") los (Los veo. I see them.) les (Les escribo la carta. I am writing them the letter.) plural feminine ("them") las (Las veo. I see them.) les (Les escribo la carta. I am writing them the letter.) In addition, the Academy allows the use of le as a singular direct object when referring to a male person (but not a thing). Thus I see him could correctly be translated as either lo veo or le veo. Substituting le for lo is known as leà ­smo, and this recognized substitution is extremely common and even preferred in parts of Spain. Other Types of Leà ­smo While the Academy recognizes le as a singular direct object when referring to a male person, that isnt the only type of leà ­smo you may hear. While the use of les as a direct object when referring to multiple persons is less common, it also is frequently used and is listed as a regional variation in some grammar texts despite what the Academy may say. Thus you may hear les veo (I see them) when referring to males (or a mixed male/female group) even though the Academy would recognize only los veo. Although less common than either of the above variations, in some regions le also can be used as a direct object instead of la to refer to females. Thus, le veo might be said for either I see him or I see her. But in many other areas, such a construction might be misunderstood or create ambiguity, and you should probably avoid using it if youre learning Spanish. In some areas, le may be used to denote respect when used as a direct object, especially when speaking to the person le refers to. Thus, one might say quiero verle a usted (I want to see you) but quiero verlo a Roberto (I want to see Robert), although -lo would technically be correct in both instances. In areas where le can substitute for lo (or even la), it frequently sounds more personal than the alternative. Finally, in some literature and older texts, you may see le used to refer to an object, thus le veo for I see it. Today, however, this usage is considered substandard. Loà ­smo and Laà ­smo In some areas, parts of Central America and Colombia in particular, you may hear lo and la used as indirect objects instead of le. However, this usage is frowned on elsewhere and is probably best not imitated by people learning Spanish. More About on Objects The distinction between direct and indirect objects isnt quite the same in Spanish as it is in English, and thus the pronouns that represent them are sometimes called accusative and dative pronouns, respectively. Although a full listing of the differences between English and Spanish objects is beyond the scope of this article, it should be noted that some verbs use dative (indirect object) pronouns where the English would use a direct object. One common such verb is gustar (to please). Thus we correctly say le gusta el carro (the car pleases him), even though the English translation uses a direct object. Such usage of le is not a violation of the formal rules of Spanish or a true example of leà ­smo, but rather shows a different understanding of how some verbs function.

Hazardous Waste and International Environmental Policy Essay

Hazardous Waste and International Environmental Policy - Essay Example Large amounts of the world’s harmful wastes generated by the world’s industrialized market economies are exported to less developed countries in Asia and Africa. The big question here is; how can domestic policy address the issue of e-waste? Are there ratifications put in place to stop this menace? This paper focuses on the possibility of the enacted legislations to stop hazardous waste disposals in developing countries. As a matter of fact, the non developed countries remain vulnerable to disposal of the hazardous e-waste since they lack a ratified policy to stop dumping of wastes in their land. As this disposal continues human health is at a great risk of it being compromised. The issue of health has raised attention compelling developing states to enact laws and regulations governing e-waste disposal. This is a positive trend that puts into check waste disposal. It is however worth noting that the regulations formulated only apply to the states in question and does n ot touch on the exporting countries where the waste originates from in fact some key producers of e-waste are reluctant to ratification plans designed to reduce these wastes. The result of lack of law enforcement on e-waste in poor and developing countries pose a major danger to human health and its environment. Poor countries need to come up with domestic policies that does not only govern internal waste disposal but also imported e-waste. In addition, poor countries need to unite and formulate an international policy that will govern importation of e-waste from developed countries. At individual level, people should learn basic concepts of recycling as this will reduce intoxication of lands and its resources. However, this may not completely stop e-waste disposal. It is further complicated because of the large volumes of wastes produced caused by the ever changing

Theories of International Relations Essay Example | Topics and Well Written Essays - 2000 words

Theories of International Relations - Essay Example The paper "Theories of International Relations" concerns the International Relations and other related social theories such as postmodernism. The International Relations theory is composed of concepts, policies and practices that serve as guidelines for the interactions between different organizations and nations. Basically, the IR is related to world politics, thus, it can be considered as one of the significant fields that explore the ways and means to prevent war, to have an economic interaction and to cooperate in the process of achieving goals for international welfare in different areas and aspects of the society. The study of IR then is important in the determination of the different paradigms that can help in the understanding of the issues and problems that can be encountered in connection to different forms of international relations. The different concepts that comprise the theory of International Relations can be considered to define different points of views. For that ma tter, one of the criticisms in relation to the manner by which the IR defines events, it can be critical and subjective on the basis of the fact that the views are segregated in the different theories that comprise the IR. One of the most significant theories related to the International Relations theory is the postmodernism view. The concept covers the wide variety of unconventional notions regarding the different social views and theories. The views identified as post-modern are classified as the concepts.

The World Heritage List In Africa Tourism Essay

The World Heritage List In Africa Tourism Essay 1. Introduction The following part of the report will give a general introduction to the site which has been chosen to be added to the list of World Heritage Sites, namely being The Maasai Mara National Reserve. Furthermore the country and the region will be described followed by arguments why particularly this site was chosen and further on naming all the criteria of the World Heritage Committee which the site meets. In addition a concise analysis will be carried out using the Fermata method. This method will help to record all the resources the site has to offer in order to develop a strategy on how to develop tourism within this area. At the end the outcome of this chapters research will be summarized in a short conclusion. General Information on The Maasai Mara National Reserve The Maasai Mara National Reserve is also known as the Mara. Historically, Maasai Mara obtained its name from the native people of Kenya the Maasai tribe who lived along the Mara River. However, the reserve is only a portion of the Greater Mara Ecosystem, which includes a group ranches for example koiyaki, lemeki ,Ol chorro Saina Maji moto Naakara Ol derkesi and Kiminet. The reserve is topography of open savannah grassland in the midst of clusters and acacia trees along the south-eastern area of the park. The reserve covers an area of 1,510 square kilometres in the south-western Kenya. In the northern part, the reserve is mainly covered with Mara-Serengeti ecosystem this covers 25,000 square kilometres between Tanzania and Kenya and in the south It is bounded by the Serengeti Park. Climate The Maasai Mara reserve is located at an altitude between 4,875 and 7,052 feet above sea level giving it a humid climate with moderate temperature. Daytime temperatures run at 85Â °F (30Â °C) and night temperatures drop to around 60Â °F (15Â °C). The rain falls between March and May and shortly in November and December. Between July and October the weather is dry hence the vegetation is in abundant thus tourism get more active in July and October to see the parks wildlife. Tourism According to www.maasaimara.com, The Maasai Mara type of tourism is ecotourism. The ecosystem holds one of the highest lion densities in world with over two million Wildebeest, Zebra and Thomsons Gazelle that migrate annually. This action is known as Natures passion play It occurs between the month of July and august. Additionally the Mara reserve is also home to the largest concentration of wildlife. These include the Big Five (Leopards elephants lions rhinos and buffalo) zebras, antelope, gnus, Oribis, hyenas, giraffes, warthogs, gazelles, hartebeests, hippos, crocodiles to mention a few. The Maasai culture is yet another major attraction, because of their authentic culture thats why it is recognised as one of the best-known tribes in world for their bright colored clothes and traditional dances, souvenirs, art and collectibles that explain their unique tradition. Moreover Bird watching is yet another source of tourism. The Maasai Mara boasts over 400 different birds species. Therefore it attracts bird lover. Arguments for the site In the following, the choice of the Maasai Mara Natural Reserve as a potential future World Heritage Site will be justified with the help of UNESCO criteria. The Maasai Mara Reserve is most famous for its unique wildebeest migration which cannot be found anywhere else on planet earth. The occurrence of the big five as well as the wintering spot for many endangered species makes the reserve an important area that has to be protected in the future. Below three criteria will be mentioned which can be referred to the Maasai Mara Reserve Criteria V: to be an outstanding example of a traditional human settlement, land-use, or sea-use which is representative of a culture (or cultures), or human interaction with the environment especially when it has become vulnerable under the impact of irreversible change. This criterion can be related to the Maasai community living in peace and harmony with the wildlife since a long time. The Maasai community used the land for many years while they kept in mind to conserve the predominant wildlife in a responsible way. Criteria VII: To contain superlative natural phenomena or areas of exceptional natural beauty and aesthetic importance. With its annual wildebeest migration from the Serengeti to the Maasai Mara Reserve the site fulfills the criterion of exceptional natural beauty and aesthetic importance since there is no comparable natural phenomenon worldwide. Further on, the Maasai Mara National Reserve is equipped with beautiful savanna grasslands and plenty different herbivores and bird species. Moreover, the big 5 can be found within the reserve what is also very unique. Criteria X: to contain the most important and significant natural habitats for in-situ conservation of biological diversity, including those containing threatened species of outstanding universal value from the point of view of science or conservation. Since the reserve is an important wintering spot for many different species the criterion of significant in-situ conservation is warranted definitely. Also the occurrence of carnivores such as the lions or the cheetahs are very important for the reserve because they are listed as threatened. Furthermore, they keep the balance of prey numbers what is crucial for the ecosystem. Analysis using the Fermata method In order to come up with a good strategy on how to develop tourism within the Mara region, it is of great importance to know what resources are already available at this moment. Therefore the FERMATA method has been chosen, providing four different tables, namely intrinsic and extrinsic values, modifiers and waypoints. These tables categorize everything that can be found in and around the site and can serve tourism purposes. Intrinsic values Describing a world heritage site means defining intrinsic and extrinsic values of the site. Intrinsic values are those which originate at the resource itself. Hence, intrinsic values are of natural character. These intrinsic values are for instance: Scale, integrity and aesthetic of the landscape as well as diversity, specialty, conspicuousness, appeal, scope and dynamics of resources. In terms of the description of the landscape, the Massai Mara Reserve is characterized by the Mara-River which divides the Reserve into two parts. Further on, the variety in altitudinal range between 200 and 1000 meter makes the Massai Mara a diverse area for all different kinds of birds and flora. With a total scope of 1,510 square kilometers the reserve provides habitat for 1,300,000 wildebeest, 360,000 gazelles and 191,000 zebras. Additionally, many carnivores as well as more than 600 bird species can be found in and around the reserve. In terms of human intervention, the reserve is managed by the Narok County Council and the Transmara County Council who set up several rules and regulations concerning behavior within the Massai Mara Reserve. Moreover, the Massai Community lost much of their land because it became a protected area of the reserve. Furthermore, many farms developed in the northern part of the reserve due to its fertile land. Referred to tourism some 45 tented camps a re distributed all over the reserve which arouses a lot of damaging actions such as high water consumption or dry-season grass fires caused by tourists. (Appendix: Table 1) Going further, it is important to take the resources into consideration. Due to its river, the grassland and the evergreen Amazonian forests the Massai Mara Reserve offers a diverse landscape. However, the landscape itself cannot be considered as very special but the migration of the herbivores that grants the reserve a general impression of outstanding beauty. As already mentioned before, the wildebeest migration can be seen as the pull factor of the site since tourists travel around the world to see this unique natural phenomenon. Although this spectacle can be seen as the main attraction of the reserve many tourists come as well to observe the more than 600 different bird species whereof plenty are listed as endangered. Finally, the Mara River is the only dynamic resource which can be found at the reserve since the rest mainly consists of grasslands and savannah. Situated in Kenya, the climate can be defined as tropical with long rainfalls from April to June. (Appendix: Table 2) Extrinsic values Generally said extrinsic values can be seen as additional features in the natural site, which also make people come to visit the place apart from the fact that they want to enjoy the outstanding natural resource. These features are made by humans and according to FERMATA Inc. (2002) they can be divided up into the following categories: Social, Cultural, Historical, Recreational and Economic. For a brief description see the appendix XYZ I To apply this analysis of the extrinsic values to the Maasai Mara Reserve, it can be said that the reserve gives home to the Maasai people. It is estimated that around 500,000 Maasai live in that area, but due to their fear of governmental intervention into their lifestyle, miscounts often occur. The Maasai belong to those tribes that have not changed a lot in their original culture, rituals and practices regardless of the modern worlds influences they are exposed to. Additionally it should be mentioned that they are mainly in possession of the land and deal with its management, however, lately they have lost a lot of land to parks and reserves, which prohibit them from accessing important sources of water, pastureland and spots where salt can be found. (Masaai Association, 2010) From a cultural point of view the villages of the previously mentioned Maasai tribe can be seen as an attracting attribute, for example due to their houses solemnly built from natural resources or their very simple lifestyle which is perfectly adjusted to their natural environment. Regarding the historical values one will have difficulties finding any in the Maasai Mara reserve, because the Maasai tribes live a nomadic life moving within the reserve depending on the season and therefore certain monuments or special places are not part of their culture. All their requirements for ceremonies and rituals are based on what they can find in nature. (Maasai Association, 2010) Concerning recreational values one can find three different lodges and around thirty campsites to spend the night there. Moreover these lodges or camps offer a number of safaris including jeeped safaris, balloon safaris, horse riding safaris and walking safaris accompanied by a Maasai. (ORD Group, 2010) Finally the economic values of the Maasai Mara National Reserve are that it attracts a lot of tourists and as the number of inhabitants is constantly increasing, but the number of livestock is decreasing in the same time , people depend more and more on other sources for nourishment. Therefore in the northern part of the area they have started to erect extensive fields to grow e.g. soya beans, wheat or sorghum. (UNESCO, 2010) Modifiers, constraints, limits, qualifying factors Modifiers: These are constraints that hinder tourism development at the Maasai Mara ReserveEcological: The damage in term of ecology is high, this is due to fact that Maasai Mara is not a national park but rather a national reserve hence it is not managed by the Kenya Wildlife Service. Its welfare is entrusted in the hands of Narok County Council and the Mara Conservancy who attain contract from the Trans Mara County Council. According to Dublin (1991) the lack of proper management leads to poaching, destruction of habitat by constant uncontrolled bush fires and exceptionally heavy influx of elephants hence to a decline in number of animals. Moreover over development of hotels, camps and loges outside the gate of the reserve is growing on a high rate. A summary of the ecological constrains according to Charles Ndegwa Mundia, Yuji Murayama ( 2009) can be found in the appendix XYZ-II. Physical: Tracks are established, balloon and helicopters in order to reach the natural and cultural heritages. Visiting the reserve is possible throughout the years. High season is from January to March this is when it is heavily overcrowded by people because it is dry and warm. Also in June and September it is overcrowded because this is the time when wild beasts migrate. Health and Safety: Masai Mara Reserve is fairly a safe place, however, it is recommended not to get out of track. Concerning the health issues, the Maasai Mara National Reserve lies in a malaria region which foresees to take anti malaria precautions, wearing long-sleeved clothing after dark and applying insect repellent. The water is safe and there is big hospital in Nairobi 100km east of the park in case of an emergency. Feeding animals is not allowed since it might induce danger of boldness and foster aberrant behaviour which might be harmful for the visitors. Regulatory: There are many rules and regulations mainly for conservation and visitors safety and faller to apply; there is a penalty in form of paying a certain amount of money. According to Matt J. Walpole (2003) In the Mara Triangle; not more than five vehicles is allowed around an animal because it disturb the harmony of animals. Secondly Human habitation is forbidden in the National Park only staffs are allowed. Thirdly driving off the road is not allowed. Also Visitors are only allowed on the roads from 06:00 to 19:00. Additionally people are urged to keep the environment clean putting trash at their accommodation not at site. Respect the culture of the local people and lastly no animal feeding by visitors because it dangerous. Economic: the fee to reach the reserve and cultural resources is moderate since the Kenyan currency value is low, except for the accommodation and guided tours depending on if you sleeping in camp or luxurious hotel. The transit to the park as well as entering the park certain fee is obligated. Adult inhabitant costs 500 Kshs; children inhabitant costs 200 Kshs, adult non local 30 US dollars and children non local 10 US dollars. Time: The reserve can be accessed from Nairobi airport, its about 270km that is six hours by car but it can shorter by helicopter. The more suitable time is in June and September when wildlife migration take place Moreover the high season is from January to March when it is warm and dry. In October December are rainy seasons however it doesnt hinder game viewing To conclude the above constrains, it can be said that Mara reserve is facing a lot of challenges mainly regarding the ecology. But they have implemented rules to protect both the animals and the people although the rules are not 100% acted upon because the government left the reserve in the hands of private ownership. However there is evidence that the site has abundant nature and culture sites, unique species and rear landscape hence these fit in UNESCO criteria. Waypoints: Gateways, Portals, Icons ME Conclusion Me

Excellence in Financial Management

Excellence in Financial Management Course 7: Mergers & Acquisitions (Part 2) Prepared by: Matt H. Evans, CPA, CMA, CFM Part 2 of this course continues with an overview of the merger and acquisition process, including the valuation process, post merger integration and anti-takeover defenses. The purpose of this course is to give the user a solid understanding of how mergers and acquisitions work. This course deals with advanced concepts in valuation. Therefore, the user should have an understanding of cost of capital, forecasting, and value based management before taking this course. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www. exinfm. com/training Published June 2000 Chapter 4 Valuation Concepts & Standards As indicated in Part 1 of this Short Course, a major challenge within the merger and acquisition process is due diligence. One of the more critical elements within due diligence is valuation of the Target Company. We need to assign a value or more specifically a range of values to the Target Company so that we can guide the merger and acquisition process. We need answers to several questions: How much should we pay for the target company, how much is the target worth, how does this compare to the current market value of the target company, etc.? It should be noted that the valuation process is not intended to establish a selling price for the Target Company. In the end, the price paid is whatever the buyer and the seller agree to. The valuation decision is treated as a capital budgeting decision using the Discounted Cash Flow (DCF) Model. The reason why we use the DCF Model for valuation is because: Discounted Cash Flow captures all of the elements important to valuation. ? Discounted Cash Flow is based on the concept that investments add value when returns exceed the cost of capital. ? Discounted Cash Flow has support from both research and within the marketplace. The valuation computation includes the following steps: 1. Discounting the future expected cash flows over a forecast period. 2. Adding a terminal value to cover the period beyond the forecast period. 3. Adding investment income, excess cash, and other non-operating assets at their present values. . Subtracting out the fair market values of debt so that we can arrive at the value of equity. Before we get into the valuation computation, we need to ask: What are we trying to value? Do we want to assign value to the equity of the target? Do we value the Target Company on a long-term basis or a short-term basis? For example, the valuation of a company expected to be liquidated is different from the valuation of a going concern. Most mergers and acquisitions are directed at acquiring the equity of the Target Company. However, when you acquire ownership (equity) of the Target Company, you will assume the outstanding liabilities of the target. This will increase the purchase price of the Target Company. Example 1 – Determine Purchase Price of Target Company Ettco has agreed to acquire 100% ownership (equity) of Fulton for $ 100 million. Fulton has $ 35 million of liabilities outstanding. Amount Paid to Acquire Fulton$ 100 million Outstanding Liabilities Assumed 35 million Total Purchase Price$ 135 million Key Point ( Ettco has acquired Fulton based on the assumption that Fulton's business will generate a Net Present Value of $ 135 million. For publicly traded companies, we can get some idea of the economic value of a company by looking at the stock market price. The value of the equity plus the value of the debt is the total market value of the Target Company. Example 2 – Total Market Value of Target Company Referring back to Example 1, assume Fulton has 2,500,000 shares of stock outstanding. Fulton's stock is selling for $ 60. 00 per share and the fair market value of Fulton's debt is $ 40 million. Market Value of Stock (2,500,000 x $ 60. 00) $ 150 million Market Value of Debt 40 million Total Market Value of Fulton$ 190 million A word of caution about relying on market values within the stock market; stocks rarely trade in large blocks similar to merger and acquisition transactions. Consequently, if the publicly traded target has low trading volumes, then prevailing market prices are not a reliable indicator of value. Income Streams One of the dilemmas within the merger and acquisition process is selection of income streams for discounting. Income streams include Earnings, Earnings Before Interest & Taxes (EBIT), Earnings Before Interest Taxes Depreciation & Amortization (EBITDA), Operating Cash Flow, Free Cash Flow, Economic Value Added (EVA), etc. In financial management, we recognize that value occurs when there is a positive gap between return on invested capital less cost of capital. Additionally, we recognize that earnings can be judgmental, subject to accounting rules and distortions. Valuations need to be rooted in â€Å"hard numbers. † Therefore, valuations tend to focus on cash flows, such as operating cash flows and free cash flows over a projected forecast period. Free Cash Flow One of the more reliable cash flows for valuations is Free Cash Flow (FCF). FCF accounts for future investments that must be made to sustain cash flow. Compare this to EBITDA, which ignores any and all future required investments. Consequently, FCF is considerably more reliable than EBITDA and other earnings-based income streams. The basic formula for calculating Free Cash Flow (FCF) is: FCF = EBIT (1 – t ) + Depreciation – Capital Expenditures + or – Net Working Capital ( 1 – t ) is the after tax percent, used to convert EBIT to after taxes. Depreciation is added back since this is a non-cash flow item within EBIT Capital Expenditures represent investments that must be made to replenish assets and generate future revenues and cash flows. Net Working Capital requirements may be involved when we make capital investments. At the end of a capital project, the change to working capital may get reversed. Example 3 – Calculation of Free Cash Flow EBIT$ 400 Less Cash Taxes (130) Operating Profits after taxes 270 Add Back Depreciation 75 Gross Cash Flow 345 Change in Working Capital 42 Capital Expenditures (270) Operating Free Cash Flow 117 Cash from Non Operating Assets * 10 Free Cash Flow$ 127 * Investments in Marketable Securities In addition to paying out cash for capital investments, we may find that we have some fixed obligations. A different approach to calculating Free Cash Flow is: FCF = After Tax Operating Tax Cash Flow – Interest ( 1 – t ) – PD – RP – RD – E PD: Preferred Stock Dividends RP: Expected Redemption of Preferred Stock RD: Expected Redemption of Debt E: Expenditures required to sustain cash flows Example 4 – Calculation of Free Cash Flow The following projections have been made for the year 2005: ? Operating Cash Flow after taxes are estimated as $ 190,000 ? Interest payments on debt are expected to be $ 10,000 ? Redemption payments on debt are expected to be $ 40,000 ? New investments are expected to be $ 20,000 The marginal tax rate is expected to be 30% After Tax Operating Cash Flow$ 190,000 Less After Tax Depreciation ($10,000 x (1 – . 30)) ( 7,000) Debt Redemption Payment (40,000) New Investments (20,000) Free Cash Flow$ 123,000 Discount Rate Now that we have some idea of our income stream for valuing the Target Company, we need to de termine the discount rate for calculating present values. The discount rate used should match the risk associated with the free cash flows. If the expected free cash flows are highly uncertain, this increases risk and increases the discount rate. The riskier the investment, the higher the discount rate and vice versa. Another way of looking at this is to ask yourself – What rate of return do investors require for a similar type of investment? Since valuation of the target's equity is often the objective within the valuation process, it is useful to focus our attention on the â€Å"targeted† capital structure of the Target Company. A review of comparable firms in the marketplace can help ascertain targeted capital structures. Based on this capital structure, we can calculate an overall weighted average cost of capital (WACC). The WACC will serve as our base for discounting the free cash flows of the Target Company. Basic Applications Valuing a target company is more or less an extension of what we know from capital budgeting. If the Net Present Value of the investment is positive, we add value through a merger and acquisition. Example 5 – Calculate Net Present Value Shannon Corporation is considering acquiring Dalton Company for $ 100,000 in cash. Dalton's cost of capital is 16%. Based on market analysis, a targeted cost of capital for Dalton is 12%. Shannon has estimated that Dalton can generate $ 9,000 of free cash flows over the next 12 years. Using Net Present Value, should Shannon acquire Dalton? Initial Cash Outlay$ (100,000) FCF of $ 9,000 x 6. 1944 * 55,750 Net Present Value $ ( 44,250) * present value factor of annuity at 12%, 12 years. Based on NPV, Shannon should not acquire Dalton since there is a negative NPV for this investment. We also need to remember that some acquisitions are related to physical assets and some assets may be sold after the merger. Example 6 – Calculate Net Present Value Bishop Company has decided to sell its business for a sales price of $ 50,000. Bishop's Balance Sheet discloses the following: Cash$ 3,000 Accounts Receivable 7,000 Inventory 12,000 Equipment – Dye 115,000 Equipment – Cutting 35,000 Equipment – Packing 30,000 Total Assets$ 202,000 Liabilities 80,000 Equity 122,000 Total Liab & Equity$ 202,000 Allman Company is interested in acquiring two assets – Dye and Cutting Equipment. Allman intends to sell all remaining assets for $ 35,000. Allman estimates that total future free cash flows from the dye and cutting equipment will be $ 26,000 per year over the next 8 years. The cost of capital is 10% for the associated free cash flows. Ignoring taxes, should Allman acquire Bishop for $ 50,000? Amount Paid to Bishop$ (50,000) Amount Due Creditors (80,000) Less Cash on Hand 3,000 Less Cash from Sale of Assets 35,000 Total Initial Cash Outlay$ (92,000) Present Value of FCF's for 8 years at 10% – $ 26,000 x 5. 3349 138,707 Net Present Value (NPV)$ 46,707 Based on NPV, Allman should acquire Bishop for $ 50,000 since there is a positive NPV of $ 46,707. A solid estimation of incremental changes to cash flow is critical to the valuation process. Because of the variability of what can happen in the future, it is useful to run cash flow estimates through sensitivity analysis, using different variables to assess â€Å"what if† type analysis. Probability distributions are used to assign values to various variables. Simulation analysis can be used to evaluate estimates that are more complicated. Valuation Standards Before we get into the valuation calculation, we should recognize valuation standards. Most of us are reasonably aware that Generally Accepted Accounting Principles (GAAP) are used as standards to guide the preparation of financial statements. When we calculate the value (appraisal) of a company, there is a set of standards known as â€Å"Uniform Standards of Professional Appraisal Practice† or USAAP. USAAP's are issued by the Appraisals Standards Board. Here are some examples: To avoid misuse or misunderstanding when Discounted Cash Flow (DCF) analysis is used in an appraisal assignment to estimate market value, it is the responsibility of the appraiser to ensure that the controlling input is consistent with market evidence and prevailing attitudes. Market value DCF analysis should be supported by market derived data, and the assumptions should be both market and property specific. Market value DCF analysis is intended to reflect the expectations and perceptions of market participants along with available factual data. In developing a real property appraisal, an appraiser must: (a) be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a creditable appraisal; (b) not commit a substantial error of omission or co-omission that significantly affects an appraisal; (c) not render appraisal services in a careless or negligent manner, such as a series of errors that considered individually may not significantly affect the result of an appraisal, but which when considered in aggregate would be misleading. Another area that can create some confusion is the definition of market value. This is particularly important where the Target Company is private (no market exists). People involved in the valuation process sometimes refer to IRS Revenue Ruling 59-60 which defines market value as: The price at which the property could change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. A final point about valuation standards concerns professional certification. Two programs directly related to valuations are Certified Valuation Analyst (CVA) and Accredited in Business Valuations (ABV). The CVA is administered by the National Association of CVA's (www. nacva. com) and the ABV is administered by the American Institute of Certified Public Accountants (AICPA – www. aicpa. org). Enlisting people who carry these professional designations is highly recommended. Chapter 5 The Valuation Process We have set the stage for valuing the Target Company. The overall process is centered around free cash flows and the Discounted Cash Flow (DCF) Model. We will now focus on the finer points in calculating the valuation. In the book Valuation: Measuring and Managing the Value of Companies, the authors Tom Copland, Tim Koller, and Jack Murrin outline five steps for valuing a company: 1. Historical Analysis: A detail analysis of past performance, including a determination of what drives performance. Several financial calculations need to be made, such as free cash flows, return on capital, etc. Ratio analysis and benchmarking are also used to identify trends that will carry forward into the future. 2. Performance Forecast: It will be necessary to estimate the future financial performance of the target company. This requires a clear understanding of what drives performance and what synergies are expected from the merger. 3. Estimate Cost of Capital: We need to determine a weighed average cost of capital for discounting the free cash flows. 4. Estimate Terminal Value: We will add a terminal value to our forecast period to account for the time beyond the forecast period. 5. Test & Interpret Results: Finally, once the valuation is calculated, the results should be tested against independent sources, revised, finalized, and presented to senior management. Financial Analysis We start the valuation process with a complete analysis of historical erformance. The valuation process must be rooted in factual evidence. This historical evidence includes at least the last five years (preferably the last ten years) of financial statements for the Target Company. By analyzing past performance, we can develop a synopsis or conclusion about the Target Company's future expected performance. It is also importa nt to gain an understanding of how the Target Company generates and invests its cash flows. One obvious place to start is to assess how the merger will affect earnings. P / E Ratios (price to earnings per share) can be used as a rough indicator for assessing the impact on earnings. The higher the P / E Ratio of the acquiring firm compared to the target company, the greater the increase in Earnings per Share (EPS) to the acquiring firm. Dilution of EPS occurs when the P / E Ratio Paid for the target exceeds the P / E Ratio of the acquiring company. The size of the target's earnings is also important; the larger the target's earnings are relative to the acquirer, the greater the increase to EPS for the combined company. The following examples will illustrate these points. Example 7 – Calculate Combined EPS Greer Company has plans to acquire Holt Company by exchanging stock. Greer will issue 1. shares of its stock for each share of Holt. Financial information for the two companies is as follows: Greer Holt Net Income$ 400,000 $ 100,000 Shares Outstanding 200,000 25,000 Earnings per Share$ 2. 00$ 4. 00 Market Price of Stock$ 40. 00$ 48. 00 Greer expects the P / E Ratio for the combined company to be 15. Combined EPS = ($ 400,000 + $ 100,000) / (200,000 share s + (25,000 x 1. 5)) = $ 500,000 / 237,500 = $ 2. 11 Expected P / E Ratio x 15 Expected Price of Stock$ 31. 65 Before we move to our next example, we should explain exchange ratios. The exchange ratio is the number of shares offered by the acquiring company in relation to each share of the Target Company. We can calculate the exchange ratio as: Price Offered by Acquiring Firm / Market Price of Acquiring Firm Example 8 – Determine Dilution of EPS Romer Company will acquire all of the outstanding stock of Dayton Company through an exchange of stock. Romer is offering $ 65. 00 per share for Dayton. Financial information for the two companies is as follows: Romer Dayton Net Income$ 50,000 $ 10,000 Shares Outstanding 5,000 2,000 Earnings per Share$ 10. 00$ 5. 00 Market Price of Stock$ 150. 00 P / E Ratio 15 1) Calculate shares to be issued by Romer: $ 65 / $ 150 x 2,000 shares = 867 shares to be issued. 2) Calculate Combined EPS: ($ 50,000 + $ 10,000) / (5,000 + 867) = $ 10. 23 3) Calculate P / E Ratio Paid: Price Offered / EPS of Target or $ 65. 00 / $ 5. 00 = 13 4) Compare P / E Ratio Paid to current P / E Ratio: Since 13 is less than the current ratio of 15, there should be no dilution of EPS for the combined company. 5) Calculate maximum price before dilution of EPS: 15 = price / $ 5. 0 or $ 75. 00 per share. $ 75. 00 is the maximum price that Romer should pay before EPS are diluted. It is important to note that we do not want to get overly pre-occupied with earnings when it comes to financial analysis. Most of our attention should be directed at drivers of value, such as return on capital. For example, free cash flow and economic value added are much more important drivers of value than EPS and P / E Ra tios. Therefore, our financial analysis should determine how does the target company create value – does it come from equity, what capital structure is used, etc.? In order to answer these questions, we need to: 1. Calculate value drivers, such as free cash flow. 2. Analyze the results, looking for trends and comparing the results to other companies. 3. Looking back historically in order to ascertain a â€Å"normal† level of performance. 4. Analyzing the details to uncover how the Target Company creates value and noting what changes have taken place. Value Drivers Three core financial drivers of value are: 1. Return on Invested Capital (NOPAT / Invested Capital) 2. Free Cash Flows 3. Economic Value Added (NOPAT – Cost of Capital) NOPAT: Net Operating Profits After Taxes A value driver can represent any variable that affects the value of the company, ranging from great customer service to innovative products. Once we have identified these value drivers, we gain a solid understanding about how the company functions. The key is to have these value drivers fit between the Target Company and the Acquiring Company. When we have a good fit or alignment, management will have the ability to influence these drivers and generate higher values. In the book Valuation: Measuring and Managing the Value of Companies, the authors break down value drivers into three categories: Type of Value DriverManagement's Ability to Influence Level 1 – GenericLow Level 2 – Business UnitsModerate Level 3 – OperatingHigh For example, sales revenue is a generic value driver (level 1), customer mix would be a business unit value driver (level 2), and customers retained would be an operating value driver (level 3). Since value drivers are inter-related and since management will have more influence over level 3 drivers, the key is to ascertain if the merger will give management more or less influence over the operating value driver. If yes, then a merger and acquisition could lead to revenue or expense synergies. Be advised that you should not work in reverse order; i. e. from level 1 down to level 3. For example, an increase in sales pricing will add more value to level 1, but in the long-run you will hurt customers retained (level 3) and thus, you may end-up destroying value. Once we have identified value drivers, we can develop a strategic view of the Target Company. This strategic view along with drivers of value must be considered in making a performance forecast of the Target Company. We want to know how will the Target Company perform in the future. In order to answer this question, we must have a clear understanding of the advantages that the Target Company has in relation to the competition. These competitive advantages can include things like customer mix, brand names, market share, business processes, barriers to competition, etc. An understanding of competitive advantages will give us insights into future expected growth for the Target Company. Forecasting Performance Now that we have some insights into future growth, we can develop a set of performance scenarios. Since no-one can accurately predict the future, we should develop at least three performance scenarios: . Conservative Scenario: Future growth will be slow and decline over time. 2. General Industry Scenario: Continued moderate growth similar to the overall industry. 3. Improved Growth Scenario: Management has the ability to influence level 1 value drivers and we can expect above average growth. Keep in mind that performance scenarios have a lot of assumptions and many of these assumptions are based on things like future competition, new technologies, changes in the economy, changes in consumer behavior, etc. The end-result is to arrive at a â€Å"most likely† value between the different scenarios. Example 9 – Overall Value per Three Scenarios You have calculated three Net Present Value's (NPV) over a 12 year forecast period. Based on your analysis of value drivers, strategies, competition, and other variables, you have assigned the following values to each scenario: ScenarioProbability xNet Present Value =Expected Value Conservative 20% $ 180,000$ 36,000 Normal 65% 460,000 299,000 M & A Growth 15% 590,000 88,500 Overall Value of Target Company$ 423,500 The Valuation Model should include a complete set of forecasted financial statements. Usually a set of forecasted financial statements will start with the Sales Forecast since sales is a driver behind many account balances. A good sales forecast will reflect future expected changes in sales prices, volumes, and other variables. NOTE: For more information about preparing forecasted financial statements, refer to Short Course 2 – Financial Planning & Forecasting. Two important points when preparing your forecast are: Historical Perspective: Make sure the pieces of your forecast fit together and flow from historical performance. Historical values are very important for predicting the future. You can gain an historical perspective by simply plotting financial trends (see Example 10). Forecast Period: Your forecast period should cover a long enough period for the target company to reach a stable and consistent performance level. For example, a company has reached a stable point when it can earn a constant rate of return on capital for an indefinite period and the company has the ability to reinvest a constant proportion of earnings back into the business. Rarely is the forecast period less than seven years. When in doubt, use a longer forecast than a shorter forecast. The final step in forecasting the financials is to estimate the value drivers and verify the value drivers against historical facts. As we indicated, three core drivers are return on capital, free cash flow, and economic value added. Make sure you test your results; are key drivers consistent with what has happened in the past, what are the trends for future growth, what are the competitive trends, how will this impact performance, etc.? Example 10 – Plotting Historical Trends to help with preparing forecasted financial statements 1990 1991 1992 1993 1994 Operations: Growth in Revenues 14% 12% 11% 11% 10% Growth in Margins 7% 7% 6% 5% 5% Working Capital: Cash 2% 2% 2% 3% 3% Accts Rec 12% 13% 13% 13% 14% Accts Payable 4% 4% 5% 5% 5% Investments: Assets to Sales 30% 31% 28% 29% 28% Return on Capital 14% 12% 13% 13% 12% When we have completed the Valuation Model, we will have a set of forecasted financial statements supporting each of our scenarios: Forecasted Income Statement – 3 Scenarios ? Forecasted Balance Sheet – 3 Scenarios ? Forecasted Free Cash Flows – 3 Scenarios ? Forecasted Return on Capital – 3 Scenarios ? Forecasted Performance Ratios – 3 Scenarios Example 11 – Forecasted Income Statement for Scenario 2 – Moderate ($ million) 2001 2002 2003 2004 2005 2006 2007 Revenues $ 6. 50$ 6. 70 $ 6. 85 $6. 95 $7. 05 $7. 09 $7. 12 Less Operating 3. 20 3. 30 3. 41 3. 53 3. 65 3. 72 3. 78 Less Depreciation . 56 . 54 . 2 . 85 . 80 . 77 . 72 EBIT 2. 74 2. 86 2. 92 2. 57 2. 60 2. 60 2. 62 Less Interest . 405 . 380 . 365 . 450 . 440 . 410 . 390 Earnings Before Tax 2. 335 2. 480 2. 555 2. 12 2. 16 2. 19 2. 23 Less Taxes . 780 . 810 . 870 . 650 . 660 . 71 . 73 Net Income 1. 555 1. 670 1. 685 1. 470 1. 500 1. 48 1. 50 Terminal Values It is quite possible that free cash flows will be generated well beyond our forecast period. Therefore, many valuations will add a terminal value to the valuation forecast. The terminal value represents the total present value that we will receive after the forecast period. Example 12 – Adding Terminal Value to Valuation Forecast Net Present Value for forecast period (Example 9) $ 423,500 Terminal Value for beyond forecast period 183,600 Total NPV of Target Company$ 607,100 There are several approaches to calculating the terminal value: Dividend Growth: Simply take the free cash flow in the final year of the forecast, add a nominal growth rate to this flow and discount the free cash flow as a perpetuity. Terminal value is calculated as: Terminal Value = FCF ( t + 1 ) / wacc – g ( t + 1 ) refers to the first year beyond the forecast period wacc: weighted average cost of capital g: growth rate, usually a very nominal rate similar to the overall economy It should be noted that FCF used for calculating terminal values is a normalized free cash flow (FCF) representative of the forecast period. Example 13 – Calculate Terminal Value Using Dividend Growth You have prepared a forecast for ten years and the normalized free cash flow is $ 45,000. The growth rate expected after the forecast period is 3%. The wacc for the Target Company is 12%. ($ 45,000 x 1. 03) / (. 12 – . 03) = $ 46,350 / . 09 = $ 515,000 If we wanted to exclude the growth rate in Example 13, we would calculate terminal value as $ 46,350 / . 12 = $ 386,250. This gives us a much more conservative estimate. Adjusted Growth: Growth is included to the extent that we can generate returns higher than our cost of capital. As a company grows, you must reinvest back into the business and thus free cash flows will fall. Therefore, the Adjusted Growth approach is one of the more appropriate models for calculating terminal values. Terminal Value = EBIT ( 1 – tr) ( 1 – g / r ) / wacc – g tr: tax rateg: growth rater: rate of return on new investments Example 14 – Calculate Terminal Value Using Adjusted Growth Normalized EBIT is $ 60,000 and the expected normal tax rate is 30%. The overall long-term growth rate is 3% and the weighted average cost of capital is 12%. We expect to obtain a rate of return on new investments of 15%. $ 61,800 ( 1 – . 30 ) ( 1 – . 03 / . 15 ) / (. 12 – . 03) = $ 43,260 ( . 80 ) / . 09 = $ 384,533 If we use Free Cash Flows, we would have the following type of calculation: Earnings Before Interest Taxes (EBIT)$ 60,000 Remove taxes (1 – tr ) x . 70 Operating Income After Taxes 42,000 Depreciation (non cash item) 12,000 Less Capital Expenditures ( 9,000) Less Changes to Working Capital ( 1,000) Free Cash Flow 44,000 Growth Rate @ 3% x 1. 03 Free Cash Flow ( t + 1 ) 45,320 Adjust Growth > Return on Capital x . 80 Adjusted FCF ( t + 1 ) 36,256 Divided by wacc – g or . 12 – . 03 . 09 Terminal Value$ 402,844 EVA Approach: If your valuation is based on economic value added (EVA), then you should extend this concept to your terminal value calculation: Terminal Value = NOPAT ( t + 1 ) x ( 1 – g / rc ) / wacc – g NOPAT: Net Operating Profits After Taxesrc: return on invested capital Terminal values should be calculated using the same basic model you used within the forecast period. You should not use P / E multiples to calculate terminal values since the price paid for a target company is not derived from earnings, but from free cash flows or EVA. Finally, terminal values are appropriate when two conditions exist: 1. The Target Company has consistent profitability and turnover of capital for generating a constant return on capital. . The Target Company is able to reinvest a constant level of cash flow because of consistency in growth. If these two criteria do not exist, you may need to consider a more conservative approach to calculating terminal value or simply exclude the terminal value altogether. Example 15 – Summarize Valuation Calculation Based on Expected Values under Three Scenarios Present Value of FCF' s for 10 year forecast period$ 62,500 Terminal Value based on Perpetuity 87,200 Present Value of Non Operating Assets 8,600 Total Value of Target Company 158,300 Less Outstanding Debt at Fair Market Value: Short-Term Notes Payable ( 6,850) Long-Term Bonds (25 year Grade BB) ( 26,450) Long-Term Bonds (10 year Grade AAA) ( 31,900) Long-Term Bonds ( 5 year Grade BBB) ( 22,700) Present Value of Lease Obligations ( 17,880) Total Value Assigned to Equity 52,520 Outstanding Shares of Stock 7,000 Value per Share ($ 52,520 / 7,000)$ 7. 50 Example 16 – Calculate Value per Share You have completed the following forecast of free cash flows for an eight year period, capturing the normal business cycle of Arbor Company: Year FCF 2001$ 1,550 002 1,573 2003. 1,598 2004. 1,626 2005. 1,656 2006. 1,680 2007. 1,703 2008. 1,725 Arbor has non-operating assets of $ 150. These assets have an estimated present value of $ 500. Based on the present value of future payments, the present value of debt is $ 2,800. Terminal value is calculated using the dividend growth model. A nominal growth rate of 2% will be used. Arbor's targeted cost of capital is 14%. Arbor ha s 3,000 shares of stock outstanding. What is Arbor's Value per Share? Year FCF x P. V. @ 14%Present Value 2001$ 1,550. 8772$ 1,360 2002 1,573. 7695 1,210 003. 1,598. 6750 1,079 2004. 1,626. 5921 963 2005. 1,656. 5194 860 2006. 1,680. 4556 765 2007. 1,703. 3996 681 2008. 1,725. 3506 605 Total Present Value for Forecast Period $ 7,523 Terminal Value = ($ 1,725 x 1. 02) / (. 14 – . 02) = 14,663 Value of Non Operating Assets 500 Total Value of Arbor 22,686 Less Value of Debt( 2,800) Value of Equity 19,886 Shares Outstanding 3,000 Value per Share$ 6. 63 Special Problems Before we leave valuations, we should note some special problems that can influence the valuation calculation. Private Companies: When valuing a private company, there is no marketplace for the private company. This can make comparisons and other analysis very difficult. Additionally, complete historical information may not be available. Consequently, it is common practice to add to the discount rate when valuing a private company since there is much more uncertainty and risk. Foreign Companies: If the target company is a foreign company, you will need to consider several additional variables, including translation of foreign currencies, differences in regulations and taxes, lack of good information, and political risk. Your forecast should be consistent with the inflation rates in the foreign country. Also, look for hidden assets since foreign assets can have significant differences between book values and market values. Complete Control: If the target company agrees to relinquish complete and total control over to the acquiring firm, this can increase the value of the target. The value assigned to control is expressed as: CV = C + M CV: Controlling Value C: Maximum price the buyer is willing to pay for control of the target company M: Minority Value or the present value of cash flows to minority shareholders. If the merger is not expected to result in enhanced values (synergies), then the acquiring firm cannot justify paying a price above the minority value. Minority value is sometimes referred to as stand-alone value. Chapter 6 Post Merger Integration We have now reached the fifth and final phase within the merger and acquisition process, integration of the two companies. Up to this point, the process has focused on putting a deal together. Now comes the hard part, making the merger and acquisition work. If we did a good job with due diligence, we should have the foundation for post merger integration. However, despite due diligence, we will need to address a multitude of issues, such as: ? Finalizing a common strategy for the new organization. We need to be careful not to impose one strategy onto the other company since it may not fit. ? Consolidating duplicative services, such as human resources, finance, legal, etc. ? Consolidating compensation plans, corporate policies, and other operating procedures. ? Deciding on what level of integration should take place. ? Deciding on who will govern the new organization, what authority people will have, etc. It is ironic that in many cases, senior management is actively involved in putting the merger together, but once everything has been finalized, the job of integrating the two companies is dumped on middle level management. Therefore, one of the first things that should happen within post merger integration is for senior management to: ? Develop an overall plan for integrating the two companies, including a time frame since synergy values need to be recovered quickly. If synergy values are dependent upon the target's customers, markets, assets, etc. , then a fast integration process should be planned. If expected synergies come from strategies and intellectual capital of the target, a more cautious approach to integration may be appropriate. ? Directing and guiding the integration process, establishing governance, and assigning project managers to integration projects. ? Leading change through great communication, bringing people together, resolving issues before they magnify, establishing expectations, etc. Once the two companies announce their merger, an entire set of dynamics goes into motion. Uncertainty and change suddenly impact both companies. Several issues need to be managed to prevent the escape of synergy values. Managing the Process The integration of two companies is managed within a single, centralized structure in order to reduce duplication and minimize confusion. A centralized structure is also needed to pull everything together since the integration process tends to create a lot of divergent forces. A Senior Project Team will be responsible for managing post merger integration (PMI). This includes things like coordination of projects, assigning task, providing support, etc. As previously indicated, it is important for both senior management and middle management to share in the integration process: Senior ManagementSenior Project Team Cultural & Social IntegrationFunctional Integration Strategic Fit between the CompaniesSelection of Best Practices CommunicationSet up Task Forces Identify Critical Issues Problem Solving The Senior Project Team will consist of representatives from both companies, covering several functional areas (human resources, marketing, operations, finance, etc. ). Team members should have a very strong understanding of the business since they are trying to capture synergy values throughout PMI. Special task forces will be established by the Senior Project Team to integrate various functions (finance, information technology, human resources, etc. ). Task forces are also used to address specific issues, such as customer retention, non-disruption of operations, retention of key personnel, etc. Task forces can create sub-teams to split an issue by geographic area, product line, etc. All of these teams must have a clear understanding of the reasons behind the merger since it is everybody's job to capture synergies. There is no way senior management can fully identify all of the expected synergies from a merger and acquisition. It is not unusual for some task forces to begin meeting before the merger is announced. If integration begins before announcement of the merger, team members will have to act in a confidential manner, exercising care on who they share information with. The best approach is to act as though a merger will not take place. Example 17 – Timeline leading up to Post Merger Integration (PMI) June 21, 1998: Officers from both companies plan post merger integration. July 17, 1998: Orientation meeting for key management personnel from both companies. July 30, 1998: Project Managers are assigned to Task Forces. August 16, 1998: Launch Task Forces. August 27, 1998: Critical Issues are identified by Task Forces. Set goals and time frames. October 26, 1998: Task Force develops detail plan for PMI. October 30, 1998: Reach consensus on final plan. November 6, 1998: Officers from both companies approve detail integration plans. November 11, 1998: Operating (action steps) are outlined for implementing the PMI Plan. January 17, 1999: Begin Post Merger Integration Example 18 – Outline for Post Merger Integration (PMI) by Senior Task Force or Senior Project Team 1. Assess current situation – where do we stand? 2. Collect information and identify critical issues for integration. 3. Develop plans to resolve critical issues. 4. Obtain consensus and agree on PMI Plan. 5. Train personnel, prepare for integration, work out logistics, map out the process, etc. 6. Implement PMI Plan – conduct meetings, setup teams, provide direction, make key decisions, etc. 7. Revise the PMI Plan – measure and monitor progress, make adjustments, issue progress reports to executive management, etc. . Delegate – Move the integration process down into lower levels of the organization, allow staff personnel to control certain integration decisions, etc. 9. Complete – Move aggressively into full integration, coordinate and communicate progress until integration is complete. Decision Making Post merger integration (PMI) will require very quick decision-making. This is due in part to the fact that fast integration's work better than slow integration's. The new organization has to be established quickly so people can get back to servicing customers, designing products, etc. The more time people spend thinking about the merger, the less likely they will perform at high levels. Many decisions within PMI will be difficult, such as establishing the new organizational structure, re-assigning personnel, selling-off assets, etc. However, it is necessary to get these decisions behind you as quickly as possible since the synergy meter is running. In addition, failure to act will leave the impression of indecisiveness and inability to manage PMI. In order to make decisions, it is necessary to define roles; people need to know who is in charge. People who are responsible for integration should be highly skilled in coordinating projects, leading people, and thinking on their feet while staying focused on the strategies behind the merger and acquisition. People Issues Productivity and performance will usually drop once a merger is announced. The reason is simple; people are concerned about what will happen. In the book The Complete Guide to Mergers and Acquisitions, the authors note that â€Å"at least 360,000 hours of lost productivity can be lost during an acquisition of just a thousand person operation. † Quick and open communication is essential for managing people issues. Constant communication is required for addressing the rumors and questions that arise within PMI. People must know what is going on if they are expected to remain focused on their jobs. Communication should be deep and broad, reaching out to as many people as possible. Face to face communication works best since there is an opportunity for feedback. Even cursory communication is better than no communication at all. â€Å"Get all the facts out. Give people the rationale for change, laying it out in the clearest, most dramatic terms. When everybody gets the same facts, they'll generally come to the same conclusion. Only after everyone agrees on the reality and resistance is lowered can you get buy-in to the needed changes. † – Jack Welch, CEO, General Electric It is also a good idea to train people in change management. Most people will lack the knowledge and skills required for PMI. Immediately after the merger is announced, key personnel should receive training in how to manage change and make quick decisions. People must feel competent about their abilities to pull off the integration. Managing Resistance The failure to manage resistance is a major reason for failed mergers. Resistance is natural and not necessarily indicative of something wrong. However, it cannot be ignored. Four important tools for managing resistance are: Communicate: As we just indicated, you have to make sure people know what is going on if you expect to minimize resistance. Rumors should not be the main form of communication. The following quote from a middle level manager at a meeting with executive management says it all: â€Å"How can I tell my people what needs to be done to integrate the two companies, when I have heard nothing about what is going on. † Training: As we just noted, people must possess the necessary skills to manage PMI. Investing in people through training can help achieve â€Å"buy-in† and thus, lower resistance. Involvement: Resistance can be reduced by including people in the decision making process. Active engagement can also help identify problem areas. Alignment: One way to buffer against resistance is to align yourself with those people who have accepted the merger. Ultimately, it will be the non-resistors who bring about the integration. Do not waste excessive resources on detractors; they will never come around. Closing the Cultural Gap One of the biggest challenges within PMI is to close the cultural divide between the two companies. Cultural differences should have been identified within Phase II Due Diligence. One way of closing the cultural gap is to invent a third, new corporate culture as opposed to forcing one culture onto another company. A re-design approach can include: ? Reducing the number of rules and policies that control people. In today's empowered world, it has become important to unleash the human capacities within the organization. ? Create a set of corporate policies centered around the strategic goals and objectives of the new organization. ? Implement new innovative approaches to human resource management, such as the 360-degree evaluation. Eliminate various forms of communication that continue with the â€Å"old way† of doing things. ? Re-enforce the new ways with incentive programs, rewards, recognition, special events, etc. Specific Areas of Integration As we move forward with the integration process, a new organizational structure will unfold. There will be new reporting structures based on the needs of the new company. Structures are built around workflows. For best results, collaboration should take place between the two companies; mixing people, combining offices, sharing facilities, etc. This collaboration helps pull the new organization together. As noted earlier, a centralized organization will experience less difficulty with PMI than a decentralized organization. Collaboration is also enhanced when there are: ? Shared Goals – The more common the goals and objectives of the two companies, the easier it is to integrate the two companies. ? Shared Cultures – The more common the cultures of the two companies, the easier the integration. ? Shared Services – The closer both company's can come to developing a set of shared services (human resource management, finance, etc. ), the more likely synergies can be realized through elimination of duplicative services. Many functional areas will have to be integrated. Each will have its own integration plan, led by a Task Force. Two areas of concern are compensation and technologies. Compensation Plans: It is important to make compensation plans between the two companies as uniform as possible. Failure to close the compensation gap can lead to division within the workforce. Compensation plans should be designed based on a balance between past practices and future needs of the company. Since lost productivity is a major issue, compensation based on performance should be a major focus. Technologies: When deciding which information system to keep between the two companies, make sure you ask yourself the following questions: ? Do we really need this information? ? Is the information timely? ? Is the information accurate? ? Is the information accessible? One of the misconceptions that may emerge is to retain the most current, leading-edge technology. This may be a mistake since older legacy systems may be well tested and reliable for future needs of the organization. If both systems between the two companies are outdated, a whole new system may be required. Retaining Key Personnel Mergers often result in the loss of key (essential) personnel. Since synergies are highly dependent upon quality personnel, it will be important to take steps for retaining the high performers of the Target Company. The first step is to identify key personnel. Ask yourself, if these people were to leave, what impact would it have on the company? For example, suppose a Marketing Manager decided to resign, resulting in the loss of critical customers. Other people may be critical to strategic thinking and innovation. Once you have a list of key personnel, the next step is to determine what motivates essential personnel. Some people are motivated by their work while others are interested in climbing the corporate ladder. Retention programs are designed around these motivating factors. The third step is to implement your retention programs. Personally communicate with key personnel; let them know what their position will be in the new company. If compensation is a motivating factor, offer key personnel a â€Å"stay† bonus. If people are motivated by career advancement, invite them to important management meetings and have them participate in decision making. Don't forget to reinforce retention by recognizing the contributions made by key personnel. It is also a good idea to recruit key personnel just as if you would recruit any other key management position. This solidifies the retention process. Finally, you will need to evaluate and modify retention programs. For example, if key people continue to resign, then conduct an exit interview and find out why they are leaving. Use this information to change your retention programs; otherwise, more people will be defecting. Retaining Customers Mergers will obviously create some disruptions. One area where disruptions must be minimized is customer service. Once a merger is announced, communicate to your customers, informing them that products and services will not deteriorate due to the merger. Additionally, employees directly involved with customer service cannot be distracted by the merger. If customers are expected to defect, consider offering special deals and programs to reinforce customer retention. As a minimum, consider setting up a customer hotline to answer questions. Finally, do not forget to communicate with vendors, suppliers, and others involved in the value chain. They too are your customers. Measuring PMI The last area we want to touch on is measurement of post merger integration (PMI). Results of the integration process need to be captured and measured so that you can identify problem areas and make corrections. For example, are we able to retain key personnel? How effective is our communication? We need answers to these types of questions if we expect success in PMI. One way of ensuring feedback is to retain the current measurement systems that are in place; especially those involved with critical areas like customer service and financial reporting. Day to day operations will need to be monitored for sudden changes in customer complaints, return merchandise, cancelled orders, production stoppages, etc. New measurements for PMI will have to be simple and easy to deploy since there is little time for formal design. For example, in one case the PMI relied on a web site log to capture critical data, identify synergy projects, and report PMI progress. On-line survey forms were used to solicit input and identify problem areas. A clean and simple approach works best. A measurement system starts with a list of critical success factors (CSF) related to PMI. These CSF's will reflect the strategic outcomes associated with the merger. For example, combining two overlapping business units might represent a CSF for a merger. From these CSF's, we can develop key performance indicators. Collectively, a complete system known as the Balanced Scorecard can be used to monitor PMI. Process leaders are assigned to each perspective within the scorecard, collecting the necessary data for measurement. Example 19 – Balanced Scorecard for Post Merger Integration (PMI) PerspectiveKey Performance Indicator Customers- Retention of Existing Customers – Efficiency in Delivering Services Financial- Synergy Components Captured to Date â€Å"- Timely Financial Reporting â€Å"- Timely Cash Flow Management Operational- Completion of Systems Analysis â€Å"- Reassignments to all Operating Units â€Å"- Resources Allocated for Workloads Human Resource- Percentage of Personnel Defections â€Å"- Change Management Training â€Å"- Communication Fe edbacks Organizational- Cultural Gaps between company's â€Å"- Number of Critical Processes Defined â€Å"- Lower level involvement in integration Chapter 7 Anti-Takeover Defenses Throughout this entire short course (parts 1 & 2), we have focused our attention on making the merger and acquisition process work. In this final chapter, we will do just the opposite; we will look at ways of discouraging the merger and acquisition process. If a company is concerned about being acquired by another company, several anti-takeover defenses can be implemented. As a minimum, most companies concerned about takeovers will closely monitor the trading of their stock for large volume changes. Poison Pills One of the most popular anti-takeover defenses is the poison pill. Poison pills represent rights or options issued to shareholders and bondholders. These rights trade in conjunction with other securities and they usually have an expiration date. When a merger occurs, the rights are detached from the security and exercised, giving the holder an opportunity to buy more securities at a deep discount. For example, stock rights are issued to shareholders, giving them an opportunity to buy stock in the acquiring company at an extremely low price. The rights cannot be exercised unless a tender offer of 20% or more is made by another company. This type of issue is designed to reduce the value of the Target Company. Flip-over rights provide for purchase of the Acquiring Company while flip-in rights give the shareholder the right to acquire more stock in the Target Company. Put options are used with bondholders, allowing them to sell-off bonds in the event that an unfriendly takeover occurs. By selling off the bonds, large principal payments come due and this lowers the value of the Target Company. Golden Parachutes Another popular anti-takeover defense is the Golden Parachute. Golden parachutes are large compensation payments to executive management, payable if they depart unexpectedly. Lump sum payments are made upon termination of employment. The amount of compensation is usually based on annual compensation and years of service. Golden parachutes are narrowly applied to only the most elite executives and thus, they are sometimes viewed negatively by shareholders and others. In relation to other types of takeover defenses, golden parachutes are not very effective. Changes to the Corporate Charter If management can obtain shareholder approval, several changes can be made to the Corporate Charter for discouraging mergers. These changes include: Staggered Terms for Board Members: Only a few board members are elected each year. When an acquiring firm gains control of the Target Company, important decisions are more difficult since the acquirer lacks full board membership. A staggered board usually provides that one-third are elected each year for a 3 year term. Since acquiring firms often gain control directly from shareholders, staggered boards are not a major anti-takeover defense. Super-majority Requirement: Typically, simple majorities of shareholders are required for various actions. However, the corporate charter can be amended, requiring that a super-majority (such as 80%) is required for approval of a merger. Usually an â€Å"escape clause† is added to the charter, not requiring a super-majority for mergers that have been approved by the Board of Directors. In cases where a partial tender offer has been made, the super-majority requirement can discourage the merger. Fair Pricing Provision: In the event that a partial tender offer is made, the charter can require that minority shareholders receive a fair price for their stock. Since many states have adopted fair pricing laws, inclusion of a fair pricing provision in the corporate charter may be a moot point. However, in the case of a two-tiered offer where there is no fair pricing law, the acquiring firm will be forced to pay a â€Å"blended† price for the stock. Dual Capitalization: Instead of having one class of equity stock, the company has a dual equity structure. One class of stock, held by management, will have much stronger voting rights than the other publicly traded stock. Since management holds superior voting power, management has increased control over the company. A word of caution: The SEC no longer allows dual capitalization's; although existing plans can remain in effect. Recapitalizations One way for a company to avoid a merger is to make a major change in its capital structure. For example, the company can issue large volumes of debt and initiate a self-offer or buy back of its own stock. If the company seeks to buy-back all of its stock, it can go private through a leveraged buy out (LBO). However, leveraged recapitalizations require stable earnings and cash flows for servicing the high debt loads. And the company should not have plans for major capital investments in the near future. Therefore, leveraged recaps should stand on their own merits and offer additional values to shareholders. Maintaining high debt levels can make it more difficult for the acquiring company since a low debt level allows the acquiring company to borrow easily against the assets of the Target Company. Instead of issuing more debt, the Target Company can issue more stock. In many cases, the Target Company will have a friendly investor known as a â€Å"white squire† which seeks a quality investment and does not seek control of the Target Company. Once the additional shares have been issued to the white squire, it now takes more shares to obtain control over the Target Company. Finally, the Target Company can do things to boost valuations, such as stock buy-backs and spinning off parts of the company. In some cases, the target company may want to consider liquidation, selling-off assets and paying out a liquidating dividend to shareholders. It is important to emphasize that all restructurings should be directed at increasing shareholder value and not at trying to stop a merger. Other Anti Takeover Defenses Finally, if an unfriendly takeover does occur, the company does have some defenses to discourage the proposed merger: 1. Stand Still Agreement: The acquiring company and the target company can reach agreement whereby the acquiring company ceases to acquire stock in the target for a specified period of time. This stand still period gives the Target Company time to explore its options. However, most stand still agreements will require compensation to the acquiring firm since the acquirer is running the risk of losing synergy values. 2. Green Mail: If the acquirer is an investor or group of investors, it might be possible to buy back their stock at a special offering price. The two parties hold private negotiations and settle for a price. However, this type of targeted repurchase of stock runs contrary to fair and equal treatment for all shareholders. Therefore, green mail is not a widely accepted anti-takeover defense. 3. White Knight: If the target company wants to avoid a hostile merger, one option is to seek out another company for a more suitable merger. Usually, the Target Company will enlist the services of an investment banker to locate a â€Å"white knight. † The White Knight Company comes in and rescues the Target Company from the hostile takeover attempt. In order to stop the hostile merger, the White Knight will pay a price more favorable than the price offered by the hostile bidder. 4. Litigation: One of the more common approaches to stopping a merger is to legally challenge the merger. The Target Company will seek an injunction to stop the takeover from proceeding. This gives the target company time to mount a defense. For example, the Target Company will routinely challenge the acquiring company as failing to give proper notice of the merger and failing to disclose all relevant information to shareholders. 5. Pac Man Defense: As a last resort, the target company can make a tender offer to acquire the stock of the hostile bidder. This is a very extreme type of anti-takeover defense and usually signals desperation. One very important issue about anti-takeover defenses is valuations. Many anti-takeover defenses (such as poison pills, golden parachutes, etc. ) have a tendency to protect management as opposed to the shareholder. Consequently, companies with anti-takeover defenses usually have less upside potential with valuations as opposed to companies that lack anti-takeover defenses. Additionally, most studies show that anti-takeover defenses are not successful in preventing mergers. They simply add to the premiums that acquiring companies must pay for target companies. Proxy Fights One last point to make about changes in ownership concerns the fact that shareholders can sometimes initiate a takeover attempt. Since shareholders have voting rights, they can attempt to make changes within a company. Proxy fights usually attempt to remove management by filling new positions within the Board of Directors. The insurgent shareholder(s) will cast votes to replace the current board. Proxy fights begin when shareholders request a change in the board. The next step is to solicit all shareholders and allow them to vote by â€Å"proxy. † Shareholders will send in a card to a designated collector (usually a broker) where votes are tallied. Some important factors that will influence the success of a proxy fight are: 1. The degree of support for management from shareholders not directly involved in the proxy fight. If other shareholders are satisfied with management, then a proxy fight will be difficult. 2. The historical performance of the company. If the company is starting to fail, then shareholders will be much more receptive to a change in management. 3. A specific plan to turn the company around. If the shareholders who are leading the proxy fight have a plan for improving performance and increasing shareholder value, then other shareholders will probably support the proxy fight. Proxy fights are less costly than tender offers in changing control within a company. However, most proxy fights fail to remove management. The upside of a proxy fight is that it usually brings about a boost in shareholder value since management is forced to act on poor performance. It is worth noting that proxy fights are sometimes led by former managers with the Target Company who recognize what needs to be done to turn the company around. In any event, studies clearly show that changes in management are much more likely to occur externally (tender offers) as opposed to internally (proxy fights). Course Summary A merger is like a marriage; the two partners must be compatible. Each side should add value so that together the two are much stronger. Unfortunately, many mergers fail to work. Overpaying for the acquisition is a common mistake because of an incomplete valuation model. Therefore, it is essential to develop a complete valuation model, including analysis under different scenarios with recognition of value drivers. A good starting point for determining value is to extend the Discounted Cash Flow Model since it corresponds well to market values. Core value drivers (such as free cash flows) should be emphasized over traditional type earnings (such as EBITDA). Some key points to remember in the valuation process include: 1. Most valuations will focus on valuing the equity of the Target Company. 2. The discount rate used should match-up with the associated risk of cash flows. . The forecast should focus on long-term cash flows over a period of time that captures a normal operating cycle for the company. 4. The forecast should be realistic by fitting with historical facts. 5. A comprehensive model is required based on an understanding of what drives value for the company. 6. The final forecast should be tested against independent sources. If pre merger pha ses are complete, we can move forward to integrate the two companies. This will require the conversion of information systems, combining of workforces, and other projects. Many failures can be traced to people problems, such as cultural differences between the companies, which can lead to resistance. Additionally, if you fail to retain key personnel, the integration process will be much more difficult. The best defense against personnel defections is to have a great place to work. If the company has a bad reputation as an employer, then defections will surely occur. Some of the risk factors associated with post merger integration are: 1. What level of integration do we implement? 2. What can we do to retain key personnel? 3. How serious are the cultural differences between the companies? . What kinds of conflicts and competition can we expect during integration? 5. To what extent do the people of both company's understand the merger? 6. Who will govern and control the new company? Success with post merger integration is improved when: 1. The two companies have a history of effective planning and strategizing. 2. The two companies have a history of succ essful change management. 3. The merger will improve the strategies