![]() ![]() The model is simple from in many respects including the simple structure of the standalone models and the manner in which the transaction assumptions feed to the sources and uses of funds and then to the pro-forma balance sheet. Inputs to the merger analysis include two different standalone models, transaction assumptions related to consideration paid for the merger and financing in of the acquisition with debt. The file and the video below use a simple stylized example of combining two companies to create a merger model. The file and video below shows how you can use a little bit of data from a real merger to evaluate the economics of synergies and premiums.Įxcel File with Illustration of Synergy Estimates in Oil Mergers of the 1990’s from Operating Expense SavingsĬonsolidation of Two Companies in Merger Model The video and file explain how to present the different valuation techniques and discuss different theoretical finance issues associated with valuation in the context of a merger. Different ways to evaluate the costs and benefits of an acquisition or a merger are described including (1) an economic approach where the after-tax NPV of synergies is compared to the premium paid in the merger (2) accretion and dilution analysis where the acquirer earnings per share (or some other statistic) is presented before and after the merger (3) measurement of the IRR on transaction where the equity invested at the transaction date is compared to the equity cash flows realised from the merger and (4) DCF valuation of components of a transaction where the standalone valuation of the target company is adjusted for transaction costs, synergies and tax effects. The first video and excel file below describe some general M&A finance and economic concepts that are different from standard M&A modelling. Videos also describe how to construct a detailed cash flow waterfall in a leveraged buyout model.įinancial Model that Demonstrates Alternative Methods to Evaluate the Costs and Benefits of Mergers and AcquisitionsĮxcel File with Different Technical and Theoretical Concepts Applicable for Analysis of Mergers and AcquisitionsĮxcel File that Includes Various Different Examples of Financial Modelling Methods Used to Evaluate M&A Transactions Synergies and Premiums in M&A Videos that describe various aspects of building the model are described. A video reviews how to use the file in financial analysis. ![]() This page includes a description of an acquisition model with a pro-forma balance sheet, alternative debt funding and risk analysis. These are statistics that in one way or another are shown on all of the models on this page. The base data is changed In this picture a sources and uses of funds analysis is displayed as well as a display of the equity IRR earned on the transaction and the accretion or dilution in earnings per share. The base data in corporate models includes all of the operating and depreciation data (the depreciation data be changed depending on the tax treatment of the acquisition). Corporate models provide the base operating data and historic analysis for M&A models. In general, M&A models use principles from both corporate models and project finance models. A merger and or acquisition (M&A) analysis is an extension of corporate models. This article describes various merger and acquisition modelling concepts and includes examples of M&A analysis. ![]()
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