7. M&A

Question 1

reasons for M&A

Answer 1

overcapacity, geographic roll up, product / market, industry convergence, M&A as R&D

Question 2

the M&A value map

Answer 2

operational reinforcement: overcapacity, roll-up
expansion: joint dvlp, platform
exploration: co-learning, learning
non related exploration

Question 3

M&A process

Answer 3

1. selection of target
2. evaluation negotiation
3. due diligence
4. integration
5. post acquisition evaluation

Question 4

value creation constraining factors

Answer 4

value appropriation by former owner (extra paid)
implementation cost
value appropriation by employees (increased salary)
value capture by competitors

Question 5

measuring value creation

Answer 5

unlevered DCF, multiples, asset valuation

Question 6

challenges in M&A

Answer 6

financial risks, integration issues, synergy realization, employee motivation

Question 7

capabilities premium in M&A

Answer 7

• positive stock market response
• positive LT performance
• value destruction

Question 8

phase 1: target method

Answer 8

informal (personal connection)
systematic (market data)
following market opportunity

Question 9

multiples

Answer 9

listed companies -> exclude premium
transaction -> include premium