OTHER CONCEPTS

• Due diligence is an investigation, audit, or review performed to confirm the facts of a matter under consideration.
• In the financial world, due diligence requires an examination of legal records before entering into a proposed transaction with another party.
• Due diligence became common practice (and a common term) in the U.S. with the passage of the Securities Act of 1933.
• Company Initiated/performed Due Diligence is due diligence is performed by companies considering acquiring other companies as well as by equity research analysts, fund managers, broker-dealers, and individual investors.
• Individual Investor Initiated/performed Due Diligence this is due diligence by individual investors is voluntary. However, broker-dealers are legally obligated to conduct due diligence on a security before selling it.
• Hard Due Diligence is concerned with the legal and financials of the company under evaluation.
• Soft Due Diligence - Soft due diligence is concerned with the people, within the company and in its customer base. So essentially, this is qualitative, which measurement cannot be normally done by use of mathematical calculation.
• In traditional M&A activity, the acquiring firm deploys risk analysts who perform due diligence by studying costs, benefits, structures, assets, and liabilities. That's known colloquially as hard due diligence.
• M&A deals are also subject to the study of a company's culture, management, and other human elements. That's known as soft due diligence.
• Hard due diligence, which is driven by mathematics and legalities, is susceptible to rosy interpretations by eager salespeople.
• Soft due diligence acts as a counterbalance when the numbers are being manipulated or overemphasized.
• The due diligence process varies from institutions, companies or individuals doing the activity.
• Mergers and acquisitions (M&A) are defined as consolidation of companies.
• Mergers is the combination of two companies to form one, while Acquisitions is one

  company taken over by the other.
• The reasoning behind M&A generally given is that two separate companies together create more value compared to being on an individual stand.
• Merger or amalgamation may take two forms: merger through absorption or merger through consolidation.
• Mergers can also be classified into three types from an economic perspective depending on the business combinations, whether in the same industry or not, into horizontal (two firms are in the same industry), vertical (at different production stages or value chain) and conglomerate (unrelated industries).
• From a legal perspective, there are different types of mergers like short form merger, statutory merger, subsidiary merger and merger of equals.
• There is always synergy value created by the joining or merger of two companies. The synergy value can be seen either through the Revenues (higher revenues), Expenses (lowering of expenses) or the cost of capital (lowering of overall cost of capital).
• In an M&A transaction, the valuation process is conducted by the acquirer, as well as the target. The acquirer will want to purchase the target at the lowest price, while the target will want the highest price.
• Valuation is an important part of mergers and acquisitions (M&A), as it guides the buyer and seller to reach the final transaction price
• A divestiture (or divestment) is the disposal of company's assets or a business unit through a sale, exchange, closure, or bankruptcy
• Divestiture transactions are often lumped in with the mergers and acquisitions process
• Partial sell-offs - Selling a business subsidiary to another company to raise capital and apply the funds to more productive core units instead
• Spin-off demerger - A business strategy wherein a company's division or unit is separated and made into an independent company
• Split-off demerger - When a company splits-up into one or more independent companies, and consequently, the parent company is dissolved or

  ceases to exist
• An ROI-based business valuation method evaluates the value of your company based on your company's profit and what kind of return on investment (ROI) an investor could potentially receive for buying into your business
• Similar to the capitalization of earnings valuation method, the multiple of earnings valuation method also determines a business's value by its potential to earn in the future.
• The book value method calculates the value of your buk business at a given moment in time by looking at your balance sheet.
• The dividend paying Capacity Method, sometimes referred to as the Dividend Payout Method, is an income-oriented method but is considered a market approach as it is based on market data
• Why study Rizal?


  • It is legal/mandated by law (Republic Act 1425)
  • Because of the historical value of Rizal's life
  • To inculcate nationalism and patriotism
• Brief history of RA 1425

  1. The Rizal Law of 1956

  2. Senator Claro M. Recto authored Senate Bill 438/Rizal Bill of 1956

  3. The bill proposes the compulsory teaching of Rizal's life and the unexpurgated form of his novels

  4. It was also to provide a constant source of patriotism for the youth

  5. The bill makes the Rizal course a required subject in all tertiary (public/private) educational institutions
• The said bill was considered an attack to the Catholic Church.
• The opposition


  • The bill was negated by Senator Francisco "Soc" Rodrigo, Decoroso Rosales, and Mariano Cuenco
  • The bill was made public on April 1956
  • The bill was opposed by the following Catholic organizations: Catholic Action of the Philippines, Congregation of Missions (CM), Knights of Columbus, Catholic Teachers Guild
  • Fr. Jesus Cavana, CM reviewed the 332 paged edition of the Noli and found 120 pages of anti-Catholic statements and only 25 were patriotic
  • The opposition stated that the bill violated religious freedom, proposed a subject that is anti-Catholic, and promotes the reading of novels that are blasphemous
• The proponents side


  • Senator Claro M. Recto fought for the bill and stated that those who eliminate the books of Rizal in their school attempts to wipe out Rizal's memory
  • Despite the threats that Catholic schools would close down, Recto continued in defending the bill
  • Senate Bill 438 was supported by the following organizations: Revolutionary veterans/spirit of 1896, Alagad ni Rizal, Freemasons (Acacia Lodge), Book Lovers Society
• The end of the debate

  1. Senator Jose B. Laurel modified the bill to accommodate the objection of the Catholic Church

  2. The teaching of the Noli and Fili were made optional

  3. On June 12, 1956, Senate Bill 438 became R.A 1425 or the Rizal Law of 1956. The bill was enacted into law during the reign of Pres. Ramon Magsaysay
• Rizal's historical value is not based on the women he dated, but on his writings and significant contribution in societal development.
• Noli Me Tangere (1887) and El Filibusterismo (1891) had a huge impact in the lives of the Filipinos.
• Rizal was one of the foremost initiators of national consciousness.
• Why is Rizal the foremost national hero?

  • His writings
  • His person
  • Public honor (before and after death)