Rating and Ranking Firms with Fuzzy Expert Systems: The Case of Camuzzi

Posted: 7 Oct 2009

See all articles by Stefano Malagoli

Stefano Malagoli

Kaleidos Corporate Finance

Carlo Alberto Magni

Università degli studi di Modena e Reggio Emilia (UNIMORE) - School of Doctorate E4E (Engineering for Economics-Economics for Engineering)

Fabio Buttignon

University of Padua - Department of Economics and Management

Giovanni Mastroleo

Università degli Studi della Calabria

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2009

Abstract

This paper presents a real-life application of a fuzzy expert system aimed at rating and ranking firms. Unlike standard Discounted Cash Flow (DCF) models, it integrates financial, strategic and business determinants and processes both quantitative and qualitative variables.Twenty-one value drivers are defined concerning the target firm (strategic assets in place and prospective financial performance), the acquisition (synergies, quality of management) and the sector (intensity of competition, entry barriers). Their combination via ‘if-then’ rules leads to the definition of an output represented by a real number in the interval (0, 1). Such a number expresses the value-generating power of the target firm inclusive of synergies with the bidder (here named Strategic Enterprise Value). The system may be used for rating and ranking firms operating in the same sector. A regression analysis, using hostile takeover multiples, may be employed to translate the score into price. The real-life case refers to Camuzzi, a natural gas distributor, acquired by Enel, the Italian ex-monopolist of electric energy.

Suggested Citation

Malagoli, Stefano and Magni, Carlo Alberto and Buttignon, Fabio and Mastroleo, Giovanni, Rating and Ranking Firms with Fuzzy Expert Systems: The Case of Camuzzi (October 6, 2009). Available at SSRN: https://ssrn.com/abstract=1483530

Stefano Malagoli

Kaleidos Corporate Finance ( email )

Piazza San Sepolcro 1
20123 Milano
Italy

Carlo Alberto Magni (Contact Author)

Università degli studi di Modena e Reggio Emilia (UNIMORE) - School of Doctorate E4E (Engineering for Economics-Economics for Engineering) ( email )

Italy

Fabio Buttignon

University of Padua - Department of Economics and Management ( email )

via Del Santo 33
Padova, 35123
Italy

Giovanni Mastroleo

Università degli Studi della Calabria ( email )

Italy

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