Dates                                                                          


24-25 November 2008
3-4 February 2009
10-11 June 2009
11-12 November 2009

Course Overview

During this course participants will learn about the strategic and financial reasons for M&A deals. They will then complete a merger model, by modelling and valuing synergies and assessing the benefits of each of the different financing options available.

In addition, participants will consider pro forma accounts post acquisition and assess the impact of EPS accretion and dilution. The value of the combined enterprise and the synergies in particular are calculated. Scenario and sensitivity analysis is also performed.

Each participant will need to bring a laptop running Microsoft Office with USB Port.


Course Content

 Introduction
Structure of the course
Getting started

 Background to M&A
Strategic reasons for M&A deals
Financial reasons for M&A deals
Introduction to case study

 Modelling
Case study: motivation for a transaction and anticipated outcome
The structure of an M&A model
For the target and bidder companies:
   • Sourcing historic data
   • Estimating key forecast ratios
   • Forecasting integrated income statement, balance sheet & cash
     flow statement
   • Calculating key financial ratios (EPS, return on capital)
   • Calculating key valuation/ trading ratios (EV/ EBITDA, EV/ EBIT,
     EV/ Sales, PER)
   • Calculating enterprise value
   • Checking the integrity of the forecast data

 Synergies
M&A rationale – defining synergies
Operational synergies: source
Financial synergies: source
Empirical evidence re. synergy benefits
Case study: calculating net synergy benefits, critique of business
  plan assumptions and revised estimates
Dividing up the synergy benefits between the parties
Modelling the division of synergies and calculating key transaction
  valuation ratios (EV/EBITDA, EV/EBIT, EV/Sales, PER)

 Case study: valuation of the standalone business
Review of DCF valuation for standalone entities

 Financing considerations & options
Financing matrix
Determining optimum capital structure – balancing operational and financial risk
Modelling capital structure post consolidation, calculating debt, equity
  and goodwill created on acquisition and revised bidders enterprise value

 Consolidated accounts
Modelling pro forma accounts post acquisition, using pro forma balance
  sheet adjustments, calculating key financial ratios (EPS, return on capital)
EPS accretion/ dilution – its use in decision making

Case study: valuation of combined business
DCF valuation of the combined business
DCF valuation of the synergies
Comparing the valuation of the standalone businesses and synergies
  to the combined business
Sense checking the output

 Sensitivity analysis
Sensitivity analysis using a variety of tools
Sensitivity analysis on:
   • Forecast operational ratios (sales growth, margins, capex etc)
   • Valuation inputs (discount rate, growth rate)
   • Financing inputs (offer price, capital structure)

 Structuring transactions
Implications for headline press announcements
Asset/ share transactions
Cash free/ debt free