Advisory Services - Mergers & Acquisitions Flashcards
What’s the main idea of M&A
1+1 = 3. Total is greater than the sum of the parts.
What’s defensive M&A
Acquiring a company before the competitor does
Company’s lifecycle
Development -> Growth -> Maturity - > Decline
Three types of M&A process
a) 1:1 private transaction b) Auctions c) Acquiring Listed Companies
Equity = ?
Equity = Value of Firm’s shares
Enterprise Value = ?
Enterprise Value = Equity Value + NET DEBT
Different methods to come up with valuation?
DCF, Multiples, LBO, Listed Price
Tens of variables involved…..
in a firm’s valuation
Which is the most popular valuation method?
DCF
Which is the most advanced valuation technique
LBO
What’s the consideration received?
It’s the offer amount received by the target company
How the target companies get paid in?
They get paid in cash, stock or combination
How “available cash” helps in M&A deal?
They help in acquiring companies fast if the right opportunity comes along
What’s earn-out mechanism?
It is the additional amount of money that the target receives if it meets certain conditions after the transaction
the combination of the two…..
will be greater than the sum of the individual parts
What are the two different types of buyers?
Corporate buyer and financial buyer
Who is a corporate buyer?
Buyer from the same industry
Who is a financial buyer
Venture Capital Fund - Startup companies, Private Equity - Growth companies, LBO Fund - Mature Companies
what’s management integration?
in the corporate buyout, management teams will be integrated after the closing of the transaction
Corporate vs Financial Buyer
Corporate buyer is looking for long-term Synergies while the Financial buyer has a short-term horizon and is looking to better the financial and efficiency of the target firm so it can be sold at a profit
