Takeover parts 1 & 2

[Faust]

but Faust, they have hardly got sunderland cheap, £30m I think for a club like Sunderland is a lot ...

To be fair, unless either of us have combed through Sunderland's financials and scrutinised the consortium's business plan, we're not really in a position to say whether the price they're paying is cheap, expensive, or fair value.

[Gringo]

£80m including debt is not £80m

If a company owes £50m

and you buy it for £30m

You have paid £30m.

If the company goes bump with debts of £50m, you have lost £30m - you are not liable for the £50m - that debt belongs to the company.

That debt belongs to the company, does it? Would that be the company which you've just bought?

Seriously - where did you get the idea that the new owners of a debt-laden company are not liable for the company's existing borrowing? Of course they are! Buying a company means you buy both its assets and its liabilities. If those liabilities are sufficiently large then it may mean you can get the company on the cheap - it certainly doesn't mean you can ignore them altogether.

Limited Liability

Shareholders in a limited company are only liable to third parties to the limit of their shareholding. Other participants e.g. directors would not normally have any personal liability except with respect to creditors where there has been wrongful or fraudulent trading or when personal guarantees or other such undertakings have been given by directors or others.

So the debts are transferred along with the company as belonging to the company. You don't 'buy' the debt, you pay £30m not £80m. If it goes bump you have lost £30m not £80m as your liability is limited as described above. The company is liable for the debt, not the owners.

[avfcinwales]

£80m including debt is not £80m

If a company owes £50m

and you buy it for £30m

You have paid £30m.

If the company goes bump with debts of £50m, you have lost £30m - you are not liable for the £50m - that debt belongs to the company.

That debt belongs to the company, does it? Would that be the company which you've just bought?

Seriously - where did you get the idea that the new owners of a debt-laden company are not liable for the company's existing borrowing? Of course they are! Buying a company means you buy both its assets and its liabilities. If those liabilities are sufficiently large then it may mean you can get the company on the cheap - it certainly doesn't mean you can ignore them altogether.

It also invaribaly means the company taking over the club have brokered a deal, whereby they have made any debts manageable and not detrimental, as was the case when Man City and Everton were taken over.

I would be amazed if anyone took over a football club or a company without caste iron assurances that the debts were both specificed and agreed upon and their forward position fully negotiated.

If not as at Leeds and Wrexham they would part liquidate and buy what was needed, selling off what wasn't, and agreeing what they couldn't finance as a total or part right off.

[Silent_Bob]

I think Ellis' asking price isn't completely unfair. Considering it's difficult to messure what the club would be worth for a potential new owner.

Looking at it from a strictly business perspective, I would say any club is not worth owning. Chelsea as an example is loosing two pounds for every pound they make. And they hope to break even somewhere around 2010. Owning a club do however come with certain bonuses as well. Mainly you get a lot of publicity, which can be very positive if that's what you're after. So it's more a question of what the club is worth to potential new owners, rather than finding an exact asking price based on the current financial situation only. Compared to Sunderland I think Villa appears like a bargain, with little or no debt, Premiership club, huge potential, etc etc.

The main reason for Ellis not receiving an offer he can't refuse is that his negotiating position is weakened by the day, rather than asking too much for his shares. His health and age sees to that. Any potential bidder would see it in their best interest not to look for a quick deal, as the chances are that they will get it cheaper tomorrow.

And I also think Ellis is more concerned by selling to the right people, rather than getting the highest price possible. He is, rightly so, concerned with his legacy.

[OutByEaster?]

The share price went up when the potential takeover was initially announced, and hasn't really gone back down to where it was. Is the takeover situation propping the share price up ?

[Gringo]

And I also think Ellis is more concerned by selling to the right people, rather than getting the highest price possible. He is, rightly so, concerned with his legacy.

Is he bollox.

ellis comes first, second and third in ellis' thinking. The club is his plaything, no more, no less. Guaranteed photo in the papers for managing to climb four steps a fortnight without pissing himself.

[BOF]

Agreed. He is using the "sell to the right people" thing so that he doesn't have to sell to anyone. There will never be anyone who meets all of his criteria. He will never sell this club.

[Richard]

I think Ellis' asking price isn't completely unfair. Considering it's difficult to messure what the club would be worth for a potential new owner.

Looking at it from a strictly business perspective, I would say any club is not worth owning. Chelsea as an example is loosing two pounds for every pound they make. And they hope to break even somewhere around 2010. Owning a club do however come with certain bonuses as well. Mainly you get a lot of publicity, which can be very positive if that's what you're after. So it's more a question of what the club is worth to potential new owners, rather than finding an exact asking price based on the current financial situation only. Compared to Sunderland I think Villa appears like a bargain, with little or no debt, Premiership club, huge potential, etc etc.

The main reason for Ellis not receiving an offer he can't refuse is that his negotiating position is weakened by the day, rather than asking too much for his shares. His health and age sees to that. Any potential bidder would see it in their best interest not to look for a quick deal, as the chances are that they will get it cheaper tomorrow.

And I also think Ellis is more concerned by selling to the right people, rather than getting the highest price possible. He is, rightly so, concerned with his legacy.

Sorry but most are using subjective means to explain how the club would be valued.

In reality it isn't like that and generally one of four ways is used:

1. Discounted cash flows.

2. Rely on company earnings using an appropriate PE ratio.

3. Dividend valuation model

4. Net assets.

Now as the first three are not really appropriate with Villa, it is likely to be the last one.

The price that ought to be paid will depend upon the cost reductions that can be made and improvements that can be achieved. These can only be evaluated and defined by looking at the operations of Villa.

In theory there is no difference between placing a value on the shares of Villa and valuing the company itself - the value of the company is simply the share price multiplied by the total shares. This is the market capitalisation of Villa.

However, if a controlling interest is being bought then the price will be higher than the share price. There will need to be a premium paid over and above the share price.

Villa is likely to be valued on the basis of it's net tangible assets. Goodwill would be excluded. In most cases the value of the assets will be less than the value of their earning power.

However, if a club is badly run and in difficulties it is possible that the value of the assests will be higher than their earning power. In these circumstances the asset valuation is extremely important.

It is difficult though and involves much more work than just adding up the figures in a balance sheet.

so it's not just a question of what he wants. There are processes to follow here that any potential buyer will undertake

[A.J.Rimmer]

And I also think Ellis is more concerned by selling to the right people, rather than getting the highest price possible. He is, rightly so, concerned with his legacy.

Is he bollox.

ellis comes first, second and third in ellis' thinking. The club is his plaything, no more, no less. Guaranteed photo in the papers for managing to climb four steps a fortnight without pissing himself.

Not for the first time I agree, in part, with everyone, Bob, Gringo & BOF.

I'm able to perform this mental contortion for one simple reason, which everyone appears to have overlooked. It is this: Ellis lies to himself.

He believes he's trying to find the right buyer. He believes he's acting in the good of the club. He believes the price is of secondary importance. He believes we all love Cuddly Uncle Doug.

He'll die at the helm because he can't bear to give it all up. I think we should be assuring him that our first act will be to rename the Witton Lane stand.

[Richard]

He'll die at the helm because he can't bear to give it all up.

So who'll die first ? The club or Ellis?

[A.J.Rimmer]

He'll die at the helm because he can't bear to give it all up.

So who'll die first ? The club or Ellis?

Ellis.

[Jez]

He'll die at the helm because he can't bear to give it all up.

So who'll die first ? The club or Ellis?

Well Doug cannot have that long, can the club last like i dunno 10 more yrs how old is Doug now?

[Richard]

He'll die at the helm because he can't bear to give it all up.

So who'll die first ? The club or Ellis?

Ellis.

I'd argue that he'll at least last this season.

I'd also argue a case that says we may very well get relegated this season.

If we get relegated I'd also argue that with our current structure, we may find it very very difficult to come back sometime soon.

From there the only way is down.

So if he stays another year I fear for our future

[Corleone]

Jellywise

[Guest RantinRob]

Dennis wise

Horrible little fuckwad

[zippy178]

Edelweiss

[ChrisVillan]

Back on topic.

[zippy178]

Ok, but I'm sorry there is no point will all this debating, nothing is going to happen this summer, as far as I can tell. Did the Comers ever actually put in a bid btw or were they just considering it. Does anyone think if Dougie gets desperate he'll go back to Ray Ranson?

[pablopicasso]

ellis is about as desperate to sell as i am to chop my bollocks and old chap off, put them in a blender and eat it with a side of salad....

[stevenjos]

ellis is about as desperate to sell as i am to chop my bollocks and old chap off, put them in a blender and eat it with a side of salad....

can i just check,

your name isnt hannibal is it??