M&A Deal Structuring and Merger Modeling
April 4, 2019: 8:00 am – 4:00 pm In Person
- This event has passed.
This course focuses on the mergers and acquisitions process, the basics of deal structures, and covers the main tools and analyses that M&A investment bankers and acquirers utilize. Learn about common structural issues, crucial merger consequence analysis and structures and methodologies. Translate fundamentals into different modeling techniques, including the most basic and widely used back-of-the-envelope method, Accretion / Dilution, as well as a more robust combination analysis combining a Target and Acquirer’s Income Statement. Learn how to sensitize basic deal structures and combination options.
Learning Objectives:
- Common structural issues in a transaction (stock vs. asset, 338(h)(10) elections)
- Merger consequence analysis including accretion / dilution and financial implications of a deal
- Build a fully functional accretion / dilution model that accounts for different transaction structures
- Learn how to sensitize financial projections and the financial impact on a transaction
Course Sections:
M&A Deal Structuring
- Review of various deal considerations and deal structuring options (cash vs. stock)
- Common structural issues in a transaction (stock vs. asset, 338(h)(10) elections)
- Buyer and seller preferences for various deal structures and rationale
- Tax implications of transactions based on deal structure and FASB 142 goodwill amortization
- Merger consequence analysis including accretion / dilution and financial implications of a deal
- Analysis of breakeven PE for both 100% stock and 100% cash considerations
- Dive deep into merger accounting for your merger model including NOL treatment and FMV step-up
Accretion Dilution Modeling
- Build dynamic merger consequence analysis (accretion / dilution) incorporating the following:
- Synergies switch, cash vs. stock sensitivity
- Amortization of goodwill switch (depending on purchase price allocation)
- Common structural issues: Stock vs asset deals and 338 (h)(10) elections
- Tax implications of transactions based on deal structure and FASB 142 goodwill amortization
- Analysis of breakeven PE for both 100% stock and 100% cash considerations
- Calculate pre-tax and after-tax synergies/cushion required to breakeven
Simple Merger Modeling
- Construct a merger model, a simple combination of Income Statement for target and acquirer:
- Project simple stand-alone Income Statement for both target and acquirer
- Analyze selected balance sheet figures and ratios and multiples
- Estimate target valuation and deal structure
- Calculate selected Pro Forma balance sheet items
- Combine target and acquirer’s Income Statement and estimated synergies
- Calculate cash flow for debt repayments to estimate debt repayments and cash balances
- Compute interest expense and interest income based on pay downs
- Calculate accretion / dilution and credit ratios
**IMPORTANT – PLEASE NOTE**
To maximize the educational value of these programs, we strongly recommend that you have an intermediate understanding of Excel. Lack of basic Excel skills will impede your ability to effectively acquire and implement the techniques and shortcuts that are presented in this program. Our courses are extremely interactive, hands-on with intensive focus on Excel shortcuts and efficiency.
Bring a PC laptop with Microsoft Excel installed, and a working USB port (in case our email containing in-class materials gets lost in your junk/spam folder, we can distribute them via flash drive). If you can only bring a Mac, please avoid Office 2008 and ideally set up a Windows environment via Boot Camp, Parallels, or VMware.