Mergers and Acquisitions
ECOM095
Lecture 2 of 5
Jesse McDougall
Visiting Professor, Queen Mary, University of London
jessewren@gmail.com
https://amzn.to/2T0BEYx
• Chapter 12 – M&A Modeling –
Accretion / Dilution Modeling
https://amzn.to/2T0BEYx
News on Dual-Class Shares
• Hong Kong and Singaporean exchanges are trying
to attract Dual-Class shares listings
• Hong Kong recently announced ability of
“innovative” companies to list with dual-class
• Singapore followed suit announcing they would
allow dual-class listings later this year
• Trying to attract bigger IPOs
• (FTSE Russell excluded Snap from its indices)
• Tech and family-owned businesses prefer dual-class
News on PUBLIC/PRIVATE
• SEC hoping to spur IPO activity, increase incentives
for firms to go public, instead of remaining private
• May allow public firms to ban shareholder lawsuits,
require arbitration to settle investor disputes
• Arbitration = lower cost, lower publicity
• Combatting a 2 decade slump in stock listings
• Right to sue considered critical protection against
fraud and securities violations
More on PUBLIC/PRIVATE
• SEC commissioner considers making IPOs more
attractive his top goal in the role
• Announced SEC would allow firms to confidentially
file their proposed IPO share structures (previously
only allowed for very small firms)
• Arbitration theoretically v unpopular with Investor
Lobby Groups and Democrats
• Conversely, class action lawsuits are considered a
major weight on the US economy
M&A Synergies
Synergies
• If Company A could be worth 40% more
than it is currently worth, if newly held
under the management team and structure
of Company B 
• Company B can afford to pay Company A
shareholders a ~30% premium on their
current share price to buy Co A
• Both parties better off than previously,
assets more efficiently utilised
Sources of Synergies
• Cost savings
• Unused tax benefits
• Debt capacity (larger entity able to borrow
more, cost of debt cheaper than equity)
• Cross-selling / marketing synergies
Synergies in Practice
• Tend to be hugely overestimated! Rarely
realised in practice....
• Result?
Failure to Realise Synergies
• Academic research demonstrates serially
acquisitive companies often underperform
less-acquisitive corporate peers
• If you pay 30% premiums frequently
enough for targets, and fail to realise
synergies, you are undertaking a valuelosing strategy!
• Often integration (HR, IT) problems
overwhelm potentially realisably synergies
Financial Services Failed Synergies
• Main assets of financial services firms are
the staff – upset staff often leave
• Extensive client losses in relationship-driven
areas like Wealth Management
M&A Deal Structures
Deal Structures
• All Cash Offers
• Cash & Share Offers
• All Share Offers
Deal Payment Structure Rationale
• All Cash Offers – acquiring company has
cash on hand, or can easily raise it in the
debt-markets to fund the purchase
• Cash & Share Offers
• All Share Offers – acquiror may not have
cash on hand, or the ability to raise it in
debt-markets, or may have HIGHLY VALUED
share price at time of acq’n! (Buffett)
Share for Share Deals
• Fixed or Floating Share for Share
Consideration
• Fixed eg. 1 acquiror share for every 3 tgt
• Floating eg. Floating acquiror shares
number for each target share, but ensures
DOLLAR amount of offer to target s/hs
• (Floating more common for BIG offerors)
Collar Arrangements
• Floating Share for Share Consideration
within a range, guaranteeing a minimum
and maximum dollar value to targets
• Precise number of acquiror shares target
shareholders will receive unknown until the
final day, but dollar return is within a
known range
Investment Banking
Innovation
Tax Innovation in M&A
• Recent theme of large US, cross-border mergers
is a primary motivator being “tax inversions”
• US-domiciled company reincorporates postmerger in the lower tax-regime domicile, saving /
earning them huge discrepancies in tax outflows
Government Axing Tax-based Deals
• US politicians noting a series of large deals which
would severely reduce US tax revenues
introduced new tax regulations that took away
most of the benefits associated with overseas
relocations.
• Three of the 5 inversions announced before the
2015 legislation collapsed
Tax Inversions – Mylan Case Study
• Moved from Pennsylvania to the Netherlands by acquiring
a subsidiary of Abbott Labs in the Netherlands, then
relocated to be tax-based there
• BUT there are worse governance rules in the Netherlands
• Teva Pharma tried to purchase Mylan, Mylan invoked
defenses relating to Netherlands corporate governance
rules, Mylan shareholders (largely US-based) furious at loss
of shareholder rights – Mylan management ignoring
shareholders wishing to sell to Teva
• SEC created new rule requiring s/h approval of all
governance changes in an inversion scenario
Hostile M&A, Unsolicited
Transactions
“Hostile” vs. “Friendly” Deals
• Agreed or “friendly” deals vs “hostile” deals
• Hostile = target mgmt does not want to be
bought out, do not agree to takeover terms
• If deal put forward to shareholders  “hostile”,
if majority tender in, target management loses
• Some i-banks and boutiques used to refuse to
work on hostile deals
• Merger arbitrageurs more wary of “hostile”
deals, high failure withdrawal rate
GKN Transaction
• Largest UK hostile bid ever
• Engineering firm GKN rejected a £8 billion offer
from Melrose, calling the offer “fake”, and an
attempt to take GKN over using its own
shareholders’ money
Takeover Defenses
• List of strategies companies employ to defend
against unwanted takeover offers
– Poison pills
– Scorched earth policies
– Lobster traps (convertible bond creeping offers)
– Staggered boards
– Supermajority amendments (requiring huge
majorities to enact changes of control)
– Golden parachutes
– Greenmail
Poison Pill Defense
• AKA Shareholder rights plan = defense plan
taken by corporate boards against unwanted
takeover offers (involves new share issuance)
• Attempts to prevent buyers from negotiating
directly with shareholders, try to force bidders
to negotiate with Board
• Makes acq’n much more costly, dilution new shs
• Illegal in the UK, uncommon in EU
• Unusual, but not eradiated in the US
Golden Parachute
• Agreed payment to executives in the case of
terminated employment as result of a takeover
• Often lowers premiums received by regular
shareholders in an eventual takeover
• Harvard paper 2010 found GPs to be valuedestructive for companies from adoption fwd
• Research in this area could easily be worked
into a good Corporate Governance PhD topic!
Golden Parachutes
• Top 10 U.S. Mergers are netting CEOs of those
companies Golden Parachutes of $430 million!!
• http://www.inc.com/associated-press/ceosreceive-430-million-from-mergers-study.html
Hostile Deal Example from 2013
• Not all Hostile deals involve entrenched
management practicing poor Corporate
Governance!
• Elan, a pharmaceutical company in Ireland,
successfully avoided being taken over in a
hostile bid by Royalty Pharm for $6.7 billion
• Elan quickly put itself up for sale and achieved a
valuation of $8.6 billion from an alternative
buyer, Perrigo
Legal, Regulatory effects on
M&A
Anti-Competitive Deals
• US Anti-trust legislation was introduced in
1840 - 1914 to combat monopoly activities
• Large Oil cos and Banks broken up
(Standard Oil into Exxon, Amoco, & Mobil.
House of Morgan  JP Morgan, Morgan
Stanley, and Morgan Guaranty & Trust)
• And... Restricts M&A where it can
substantially lessen competition
Anti-Competition Example
• In addition to the famous cartel break-ups
of the early 1900s, the US and EU laws
remain powerful elements in M&A practice
• In 2012, Hertz bought Dollar Thrifty for $2.3
billion, the US Justice Department forced it
to sell its Advantage rent-a-car division as
an “antitrust remedy”, which 1 year later
went bankrupt as a solo entity!
Regulatory Hurdle Example
• Jan 2016 Banking acquisition: KeyCorp to
buy First Niagara Financial Group for $4.1
billion, announced deal Oct 2015
• State of New York governor arguing the
deal creates an anti-competitive banking
marketplace in Upstate New York, would
harm the state with expected job cuts
• KeyCorp Merger Article 18 Jan 2016
Regional M&A Differences
• Different legal frameworks crossborder
• Some governments protect more (or less)
of their local industries – prohibit or
impede certain industrial deals (ArcelorMittal labour example. National security
examples. Resource control examples)
• Anti-competitive / Anti-trust rules
US. vs. European Deals
• UK deals require financing to be secured
pre-deal-announcement (not in the US)
• UK has predetermined timeframes under
the “City Code of Takeovers and Mergers”
http://www.thetakeoverpanel.org.uk/
• Each European country has different
takeover “majority threshold”
Profound Geog. Implications...
• As a result of pre-deal-announcement
financing requirement in the UK...
• Bankers must secure pre-announcement
indications from institutional investors as to
their interest in Secondary Equity (Rights)
or Debt Offerings to finance M&A
• M&A in Europe has much more “pre-deal”
trading activity and deal rumours than US
Deal Closure Risk
How do Deals Fail to Close?
• Buyer fails to secure adequate Financing
• Counterbidders win out
• Target due diligence, Nat. disasters (MACs)
 time is the enemy of deals closing
• Fails to pass anti-competition rulings
• Government blocking
• Target s/hs do not take the offer up
• Acquiror s/hs revolt (much more rare)
How do Deals “Fail” Post-Closure?
• Poor integration
• Synergies unrealised (value-destroying
M&A)
• IT integration fails
• HR / cultural breakdown
• Losses of large numbers of disgruntled staff
• Customers disgruntled, shift to competitors
• Many targets quietly divested years later...
Quiet Divestiture Example…
*Google buys Motorola for $12.4 B (2012)*
• Lenovo to buy Google’s Motorola
handset unit for $2.9 B (2014)
• Twitter ablaze $GOOG wasted $9 B s/h
value
• But... had sold the set-top business, and
likely held most of the 17,000 PATENTS
Roles, Research
Ancillary Roles
• Lawyers excl. to M&A documentation, advice
• Crossborder law particularly well-paid, specialist
http://dealbook.nytimes.com/category/columnists/deal-professor/
• Subscription websites for timely, detailed M&A
information / risk of deal failures $$$
• Sales / research at i-banks & brokerages offering
exclusively M&A info knowledge to Hedge
Funds who trade Merger Arbitrage
• Journalism focused entirely on M&A
PhD Research Ideas
• Track M&A (or IPO / secondary offering and
debt-offerings) fees over time
– Track also at i-banks vs. Boutiques (covert “balancesheet use” at large banks)
• Long term share price performance of highly
acquisitive vs. non-acquisitive companies
• Realised synergy analysis (by industry or on all
deals over 5 year timeframe in one geography)
• Share price performance of companies who
adopt Takeover Defense Strategies
Merger Modelling
Models to Employ
• Accretion / Dilution Merger model
•
•
•
•
DCF
Comparative Valuations
Precedent Transactions Analysis
Sum-of-the-Parts Analysis
This
week
Next
week
Valuation Goals
• Seeking to undertake ACCRETIVE transactions....
 Earnings under combined entity > Per-Share
• This goal is non-negotiable – if all of your
modeling work does not yield an accretive
transaction, you should always advise your
client against pursuing it
• No “strategic” substitutes. Ultimately strategic
benefits MUST lead to tangible ACCRETION that
flows into the numbers, modelled financially
Formatting
• Formatting incredibly important in i-banking!
•
•
•
•
Commonly use blue text for INPUTS
Black text for CALCULATED NUMBERS
Green text for links to other sheets
Red text for cells needing more attention, to
return back to...
• Naming important cells like “tgt_shpx”
Accretion/Dilution Model
Merger Model First Step
• Collect market data
from Bloomberg,
Yahoo Finance,
Google Finance (or
other sources)
• Collect corporate
info on both
Acquiring and
Target firms (from
EDGAR company
filings)
EVs for Acquiror and Target. EV = Debt + Equity
Include all debt, all convertible securities, all forms of
equity, common share classes, warrants, preferred shares
Calculate
Enterprise
Values
MARKET VALUE OF EQUITY on listed share price
DEBT VALUE from most recent balance sheet (unless it is
trading away from par)
OTHER SECURITIES? Preferred shares + ?
FDSO – Fully Diluted Shares
Outstanding
FDSO = Fully Diluted
Shares Outstanding
A Note on
Fully
Diluted
Shares...
Important to calculate
FULLY DILUTED figure,
often materially higher
than basic!
Most employee/mgmt
options will convert in
event of a merger
Basic Shares
Outstanding + exercise
of ITM options –
repurchased shares
ITM options conversion
$ used to repurchase
shares in the market
Convertible bonds
need to be analysed (if
applicable)
Errors in Equity Valuations
• Key error source
• Look for all sources of dilution – employee
share option tables, convertible securities
Need an options table for
each company (assuming
they each have some
employee share options
outstanding)
• Include unvested, mergers cause shares to vest
Goldman Sachs advised Tibco Software in its
acquisition by Vista Equity Partners
Fully
Diluted
Shares
Mistake!
Goldman miscalculated the number of Tibco shares
outstanding on a spreadsheet given to Vista. Vista
bid $4.2 billion but ended up paying $100 million
less because of a share count error by Goldman staff
Deal in Autumn 2014, in court through early 2016,
result: GS paying Tibco investors $30 mil
Deal terms: cash, shares, or combination
Cost of debt, if used to finance transaction
Deal
Assumptions
Advisory fees
Synergy assumptions
ASSUMPTIONS need to be input such that
they flow through model as you modify /
flex them
If both companies have identical
year-ends, GREAT!
Align Date
Timeframes
If not, need to adjust to have the
same year end in your model (luckily
US companies report quarterly)
US companies report quarterly (10Q
filings), and then a bigger filing
annually (10K filing)
Dates
• LTM = TTM
• Trailing 12 month period of historical reported /
available information, often not a full calendar
fiscal year...
• Use most current information available, but
may have to do TTM calcs
Acquiror’s Financial Information
• Input historical income
statement data for a
couple of years
• “Actual” Financial from
historical years’ data
typically noted as 220A,
2021A, 2022A
Adjust to Cash Figures
• Convert data from public filings, which are in
GAAP accounting format, into cash figures
• Subtract depreciation & amortisation
(accounting measures, not cash figures)
• Add capital expenditures (capex is more
variable and lumpy than D&A, but is cash)
• Capex and D&A must converge over time (and
in your model)
• Subtract employee stock comp (non-cash)
Percentages of Interest
• Analyse the % change Year over Year of each of
the key figures in the Income Statement
– Revenues
– Cost of Goods Sold
– Selling General & Administrative
– EBITDA
– Depreciation & Amortisation (D&A)
– Capital Expenditures (Capex)
– Employee Share Compensation
– Earnings per Share (EPS)
Helps analyse growth!
Growing Revenues?
Decreasing costs over
time?
What is the trajectory of
the income statement
implying about the
company’s prospects?
Model Forward in Time
• Project acquiror’s income stmt for 5-10 years
• “Projected” or “Estimated” years noted as
2023E, 2024E, 2025E or 2023P, 2024, 2025P
• Sources:
– Investment bank research analyst reports
– Bloomberg consensus estimates Logic of long-term growth.
Extremely difficult to grow
– Company IR dep’t, conf calls
at double-digits for
– Your own projections
consecutive decades…
Growth Modelling
Stable growth
Growth,
g
One stage growth
Time
g
Two stage growth
High g
Stable
Time
g
Three stage growth
High g
Transition
Stable
Time
Target’s Financial Information
• Input target’s historical income statement data
for a couple of years
• Convert to CASH (from accounting measures)
• Calculate and analyse growth through P&L
• Project income statement for 5-10 years using ibank research, Bloomberg consensus data, your
own projections
Same work you have just performed for the Acquiror’s income statements
Shortcuts / Keystroke Functions
•
•
•
•
•
•
•
•
•
•
•
•
Ctrl + Home (brings you to the A1 cell of tab)
Ctrl+PgUp or Ctrl+PgDn moves between tabs
Ctrl+arrows brings you to edges of blocks of data
Shift+Spacebar highlights a row (Ctl+- delete row)
Ctrl+Spacebar highlights a column
Alt+T+U+D (Trace dependents, if any)
Ctrl+Z Undo
Alt+E+R Redo
Ctrl+C, V, and X. Copy, Paste, and Cut
Ctrl+F and H. Find and Replace
Ctrl+1 brings up cell formatting menu
Ctrl+¬ shows all formulas as formulas, not results
Synergies
•
•
•
•
•
COGS
SG&A
Revenue
Tax
Borrowing capacity?
• Depending on the businesses being combined
you can forecast how synergies might arise
Synergies – Horizontal Mergers
• Synergies arise from economies or scale
(reduced costs) or from increased market power
(increasing profit margins and sales)
Synergies –Vertical Mergers
• When a firm buys its supplier or distributor,
synergies arise from greater control over chain
of production (weighed against loss of efficiency
from a captive supplier who is less incentivised
to reduce costs / compete with other suppliers)
Synergy Examples
•
•
•
•
•
•
•
•
•
•
Drug companies combine reduce R&D costs
Headcount reduction, competitors combine
Eliminating surplus stores or factories
IT, accounting, marketing across larger business
Greater purchasing power with suppliers
Marketing / selling complementary products
Cross-selling to new customer base
Share distribution channels, access new markets
Tax benefits
Enhanced debt capacity in larger entity
Tax Rates
• Apply acquiror’s tax rate to overall entity
• First apply tgt’s tax rate to the target’s financial
model, to ensure your numbers are sensible /
matching with GAAP accounting, then apply
acquiror’s rate since this is what will apply on a
forward basis
Balance Sheets
• Create a tab with the main Balance Sheet
information from both the Acquiring company
and the Target company’s
• The most recent information on assets and
liabilities for each company
Cost of New Debt?
• If Acquiror finances with cash, but doesn’t have
sufficient cash on its balance sheet…
• Needs to issue bonds to fund the purchase
• Look for Yield to Maturity of currently
outstanding bond issuances as a proxy for cost
of raising debt in the market now (Bloomberg)
• This interest rate will figure in as a cost to the
pro forma income statements
Pro Forma Income Statements
• Incorporate synergies into combined, projected
income statement of post-closure hypothetical
merged entity
Model in Flexibility to your
Excel
Analyse Various Target Stock Prices
• Ensure your model can illustrate the resulting
accretion / dilution for a range of potential
Offer Proposal Prices for your Target Stock Price
Flex Means of Payment
• Ensure your model can illustrate the resulting
accretion / dilution with different means of
payment
• How does the deal look if the acquiror pays
all $ ?
• All Stock ?
• A mix ?
Deal Consideration vs. Final Capital
Structure
• Ensure the deal consideration proposed leaves
the combined entity with a logical capital
structure
• One in keeping with its peer group, and / or
• Logical for its leverage ratios or potential
covenant breaches
Synergies Flexibility
• Leaving all else equal for a moment, ensure your
model can illustrate what level of synergies would
be required for your deal to breakeven in terms
of being 0% accretive/dilutive
All Shares
• Incremental cost relating to the transaction is
the advisory/transaction fees
(Acquiring co issues brand new shares to exchange for target’s
shares, dilutes the existing Acquiror shareholders’ stakes, but
offset by taking over the assets & liabilities of the Target)
All Cash
Costs are:
• Interest on debt raised to fund the cash
purchase (or loss of interest income on cash
held on balance sheet used to fund cash
purchase)
• PLUS
• Advisory / transaction fees
Sources & Uses of Cash
• Where you determine how to pay for the deal
• Considers buyer’s cash, target’s cash, financing
fees, advisory fees, debt if retired upon
transaction, debt if issuing to raise funds,
secondary offering if undertaking to fund
transaction
Sources MUST EQUAL Uses
• Uses:
Target equity costs (common & preferred &…)
+ Target debt instruments (sometimes roll in)
+ Advisory fees
= Total Usage
• Sources:
Acquiror’s shares (if paying with or partly with shares)
+ Acquiror’s cash (if paying with or partly with cash)
+ Target debt assumed (if rolled into Acquiror post-acq’n)
= Total Sources
Premiums Analysis
Stock % Premiums Analysis
• Evaluate what levels of stock price premium
your potential acquisition requires to be viable
and / or acceptable to target shareholders and
to be accretive to the acquiror (if all of these
constraints can be met simultaneously, with
reasonable synergies assumptions)
Example in the News
• Tobacco acquisition annc’d Jan 2017
• British American Tobacco buying the residual 60%
stake in Reynolds American for $49 billion
• 26% premium over “clean” price of Reynolds
• $400 million of annual savings by year 3
• $1bn breakup fee
Big Premium in the News
• Cancer drug deal
• Takeda buying Ariad
• Paying 75% premium!
Premiums often cited…
• A long time ago I analysed a long time series of
deal premiums
• Found 30% to be a rough average
• But in reality it can be as low as 5% or as high as
well over 100%
• Really depends on the deal, how attractive the
synergies are, if there are multiple potential
bidders, how entrenched owners/mgrs are
Scenario Analysis of Purchase
• Compare a range purchase prices to analyse:
– Premiums offered at different purchase prices
– Multiples of Revenues, EBITDA, EBIT, P/E ratios at
different potential purchase prices
• Compare these premiums and multiples to
recent industry transactions
• Compare the premium to a recent range of the
Target’s traded share price
Deal with Excessive Multiples!
• Cisco offered to buy AppDynamics for $3.7 bn
• AppDynamics was about to do its IPO, with the
high end of the pricing range just over $2bn
• Buyer having slow growth, tgt very high growth
(50% per annum!)
• Multiple paid of 12x Revenue vs. peer Relic
(similar g) valued at 5x Revenues
• Partly a story about perceived scarcity in tech
Purchase Share Price Range
• Compared to a historical graph of the target’s
share price…
• Will shareholders consider this an attractive
premium over the recent trading range?
• Will it be deemed opportunistic if the sh px
recently and for a long time traded well above
the intended bid price?
• Premium over a sensible (no bid premium, no
rumour premium) CLEAN price?
Purchase Share Price Range
50% drop!
Sh Px
Last 12 Months
Deal Announcement
5%, 20%, 30%
premiums seems
opportunistic,
insulting
? % premium is
psychologically
quite attractive
Last 12 Months
Deal Announcement
Shareholder Analysis
Shareholder Analysis
• Take a look at who the largest shareholders are
of a company
• Bloomberg has some functions that help with
this: HDS and PHDS (Holdings and Primary
Holdings)
• Large institutional (passive) holdings? Activists?
Founders / owners / management?
• May impact your feasibility discussion
Shares Volume Traded Analysis
• Analyse the weighted average share price from
the past [year]
• This can help to ascertain potential entry prices
investors are “pinned” to
Shareholder Analysis
6,000
46.3%
Share Volume Traded (in '000s)
5,000
4,000
3,000
18.8%
2,000
15.9%
11.1%
7.7%
1,000
0.2%
0
$17.50 - $19.50
$19.51 - $21.50
$21.51 - $23.50
$23.51 - $25.50
Per Share Price Range
$25.51 - $27.50
$27.51 - $29.50
Accounting Adjustments
Good Accounting Background
• Figures from Financial Statements and from the
CFO / Treasury of companies must often be
“adjusted” to exclude one-time only cash
outflows / inflows and “non-recurring” items
• Some facility and understanding of these is
crucial / very commonly used here to achieve
“normalised” figures to calculate historical
growth, estimate future growth
One-off adjustments
• Financial statements are frequently adjusted to
exclude “one-off” line items in historicals
• If a company recently sold a business, or
endured a write-down of historical asset values,
these items are not expected to recur in
upcoming financial years, so should be excluded
from figures you are hoping to estimate in
forward ongoing / growth data
• One major source of CASH vs. ADJ differentials
Sidebar on Adjustments!
• Cash vs. accounting based metrics
• Historical analysis of “cash taxes paid” vs.
taxable income declared reveals many
fraudulent companies have large discrepancies
between these two figures
• Gist is that fraudulent companies don’t want to
pay real, cash taxes on income they haven’t
really earned...
• Where these deviate heavily, warrants analysis
Accretion / Dilution
Accretive / Dilutive?
• Goal once created Pro Forma Financials is to
show if the transaction is accretive or dilutive to
the Acquiror in the years after the transaction
closes
• This will vary depending on payment method
(all cash, or all shares)
• All-stock  only costs are advisory/txn fees
• All-cash  usually includes incremental interest
costs to fund the transaction
Accretive Transactions...
• Accretion “arbitrage”...
• High growth co buys low growth co, tries to
have its high growth multiple applied to overall
entity  instant accretion!
• Co A with 20x P/E and E of $100 m buys Co T
with 15x P/E and E of $25 m
• Combined earnings value $125 m, hoping
market values at 20x P/E under A’s mgmt...
• In practice, analysts will see the low g assets
and value combined entity at 2375/125=19x
Other Methods
• Notice that a merger model gives in essence a
“relative” valuation, by indicating the accretion
to the buyer
• If the buyer’s stock is well over-valued by the
market, and the target’s stock is also overvalued (but less so), a merger model might
indicate it is highly accretive to buy the target,
but note that the target is still over-valued!
• Therefore, one also always looks at other
valuation metrics in a purchase process
M&A Pitchbooks
Pitchbook
• Main output in a tangible sense is a pitchbook
• Powerpoint deck printed & bound to bring to
client meetings
• Includes strategy ideas, modelling outputs,
sensitivity analyses, merger proposal details
Advisor to Acquiror
• For the Project, take the position of a
Hypothetical Advisor to Acquiring Firm
• One valid option is that you run all the analysis
and you advise them NOT to purchase if it isn’t
attractive enough for the Acquiror!
• Take the position of genuinely providing the
best advice given your analysis
Next Lectures
• Week 3: Valuation beyond Accretion, LBOs
• Week 4: The trading side of announced
deals, merger arbitrage
• Week 5: HF Strategies, SPACs vs. Direct
Listings, Project Finance vs. Corporate
Finance, Final Exam Review
Best email to contact me on:
jessewren@gmail.com