Mergers and Acquisitions
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What’s Included
What are Mergers and Acquisitions?
What are Mergers and Acquisitions?
This introductory lesson explains what mergers and acquisitions are, and why companies decide to pursue them. We also learn how synergies work and about the qualitative factors that can affect these transactions.
How to Build Merger Models
How to Build Merger Models
Merger models are very different to basic valuation models, as they contain 3 separate models in 1. In this lesson, I'll show you how a merger model is constructed and the metrics used to evaluate the attractiveness of a transaction
Introducing the Merger Case
Introducing the Merger Case
ShirtShop is a fictional clothing retailer that wants to acquire another retailer TrouserTown. In this lesson, we learn the motivation behind the proposed transaction and the synergies that ShirtShop hopes to achieve.
Analyzing the Acquirer
Analyzing the Acquirer
This lesson examines the recent financial performance of both the Acquirer in our proposed deal. We do this primarily by examining the Income Statement, which may help us understand the motivations behind this deal.
Funding the Proposed Transaction
Funding the Proposed Transaction
In this lesson, we examine the likely sources of funds that the acquirer will use to fund the transaction. This requires us to review the balance sheet of both the acquirer and the target
Deal Synergies
Deal Synergies
In this lesson, we project both the cost synergies and the revenue synergies that the acquirer has assumed will occur once the companies are combined.
Defining our Transaction Assumptions
Defining our Transaction Assumptions
Our transaction assumptions in the merger model focus primarily on the sources of funding and the fees incurred in completing the deal.
Sources and Uses of Funds
Sources and Uses of Funds
In this lesson, we complete a Sources and Uses of Funds Table for the transaction. This simple calculation is complicated by the cash available on the target's balance sheet.
Combining Income Statements Part 1
Combining Income Statements Part 1
In this lesson, we combine income statements for both the target and the acquirer. We also learn how to include the impact of synergies on our revenues and costs.
Combining Income Statements Part 2
Combining Income Statements Part 2
We finally complete our combined income statement in this lesson and calculate our net income projections for the enlarged company.
Accretion and Dilution
Accretion and Dilution
Every merger is either accretive or dilutive. In this lesson, we learn what these terms mean and how to quickly perform accretion / dilution analysis in our case study.
Cash Flow and Debt Analysis Part 1
Cash Flow and Debt Analysis Part 1
To project the cash and debt balance for the next 5 years, we need to create a simplified Statement of Cash Flows for the combined entity. In this lesson, we calculate the amount of cash available for debt repayment
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