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W3. M&A Strategy - Coggle Diagram
W3. M&A Strategy
Motivations
Use of Capital
Return to shareholders or repay debt
Reinvest
Value Creation Alternatives
Minority investments
Strategic alliances
JV
Franchising
M&A - highest financial risk, highest business integration risk, lowest loss of strategic and business control, and lowest exposure to partners' performance risks
Partnership agreements - lowest financial risk, lowest business integration risk, highest loss of strategic and business control, and highest exposure to partners' performance risks
Buyer's Motivation
Financial business seeking capital gain at exit
Consolidators to solidify market position
Strategic buyers to strengthen its business
Sellier's Motivation
Sale of non-core business
Financial owners seeking to exit
Retirement and estate planning
Types of Acquisitions
Large - combination of similar sized co.
Bolt-on - sizeable buyers acquires smaller co. (capacity expansion)
Processes, Players, and IB's Roles
Process
Structuring and Negotiating
Negotiations
Financing arrangements
Due diligence
Deal announcement
Merger and Business Integration
Execution and Business Integration
Lessons Learned
Days 1-100
M&A Strategy and Planning
Screening potential deals
Preliminary discussion and planning
Players
Professionals
Accountants
Legal Counsel
IB
Facilitators
External Parties
Regulators
Customers
Suppliers
Competitors
Other Stakeholders
Fund Providers
Creditors
Acquirer and Target
Public Shareholders
CEO
Controlling Shareholders
Executive Management
BoD
Employees
Sale Process
Controlled Approach - multi-party discussion
Competitive Auction
Discrete Approach - top secret discussion
Objectives
Timely completion
Certainty of outcome
Minimize disruption
Attractive structure
Maximize sales proceeds
Documentation
Confidential info memo
Management presentation
Confidentiality agreement
Data room
Exclusivity agreement
Invitation (solicitation of interest) letter
Definitive agreement
Market Size and Facts
Deals results
Succeeds due to clear value creation
Fails due to poor cultural fit
Strategy and Planning
IBs role
Processes
D or E issuance
D or E distribution
Strat plan, target select, nego
Investment of sales proceeds (seller)
Business units
Global capital market
Research, trading & sale
M&A advisory
Wealth management
Does M&A always add value?