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M & As Appendix - Coggle Diagram
M & As Appendix
OVERVIEW
Structure
- Buy via Assets or Shares
- Pros & Cons of choice
Terms
- Financed via cash or shares
- NB! Exchange Ratios only apply if shares will be used
Value Target
- FCF, Price Multiples or Div Discount
- Acquiring Co & Merge to be valued
- Synergistic benefits: who does it go to
-
DUE DILIGENCE
- intensive investigation of the Target's financial, legal & operational issues
- verify its (A)s & (L)s, as well as hidden or potential (L)s
- want to avoid costly losses
- lvl of due diligence depends on context
i.e. am I merging w/ a Co I have an existing relationship w/?
- consider qualitative factors: strategic context, value drivers, tax consequences, industry trends, sustainable returns?
Checklist:
Co documents
Agreements, contracts, licenses
Share Capital
Exec directors, mngmnt & EEs
AFS
Products & markets
Purchases & suppliers
Non-current (A)s
Current & Non-current (L)s
Taxation
Borrowing & debt issues
Other factors
ALTERNATE CALCS
Max Price ER
- Acquiring Co & Merged Co Equity values known
Shares of Acquiring Co known
- Subtract the above Equity values = Target Co's
Equity + Synergy
- Acquiring Co Equity / Shares = Acquiring Share price
- Divide 2. by share price = Nr of shares issued to Target
- Acquiring Co S/Hs will be in the same position before & after merge
Min Price ER
-
- Subtract the above Equity values = Acquiring Co's
Equity + Synergy
- Acquiring Co Equity / Shares = Acquiring Share price
- Divide Target Co by share price = Nr of shares issued to Target
- Target Co S/Hs will be in same position before & after merge