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  • Mergers & Acquisitions

    Transféré par

    Vishwesh Koundilya
    14 vues8 pages
    The document discusses mergers and acquisitions (M&A). It outlines factors that affect M&A like economic conditions and availability of funds. It also describes the M&A cycle in which interest rates are low and valuations are attractive. The process of acquisitions includes identifying value, screening candidates, valuing targets, and negotiating deals. Poor management, paying too much, and lack of integration are common reasons M&As fail. Post-merger integration requires dedicated teams, communication, and cultural sensitivity. Discounted cash flow valuation involves calculating cost of capital, determining free cash flows, and calculating present value and terminal value.

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    M&A

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    © Attribution Non-Commercial (BY-NC)

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    The document discusses mergers and acquisitions (M&A). It outlines factors that affect M&A like economic conditions and availability of funds. It also describes the M&A cycle in which interest rates are low and valuations are attractive. The process of acquisitions includes identifying value, screening candidates, valuing targets, and negotiating deals. Poor management, paying too much, and lack of integration are common reasons M&As fail. Post-merger integration requires dedicated teams, communication, and cultural sensitivity. Discounted cash flow valuation involves calculating cost of capital, determining free cash flows, and calculating present value and terminal value.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PPTX, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    14 vues8 pages

    Mergers & Acquisitions

    Transféré par

    Vishwesh Koundilya
    The document discusses mergers and acquisitions (M&A). It outlines factors that affect M&A like economic conditions and availability of funds. It also describes the M&A cycle in which interest rates are low and valuations are attractive. The process of acquisitions includes identifying value, screening candidates, valuing targets, and negotiating deals. Poor management, paying too much, and lack of integration are common reasons M&As fail. Post-merger integration requires dedicated teams, communication, and cultural sensitivity. Discounted cash flow valuation involves calculating cost of capital, determining free cash flows, and calculating present value and terminal value.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PPTX, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 8

    MERGERS & ACQUISITIONS

    M&A

    Merger

    Acquisition

    Horizontal Vertical

    FACTORS AFFECTING M&A


    External Factors -General economic condition -Competition Policy -Monetary Policy Internal factors -Management Capability -Availability of Funds

    M&A CYCLE
    -Corporates have access to funds
    -Interest rates are low -Valuations are low -Bank finance is available

    PROCESS FOR ACQUISITION


    Manage pre-acquisition phase Identify the value adding approach Screen candidates Value the candidates Negotiate Manage post-merger integration

    FAILURE OF M&A
    Poor management Bad luck Acquirers pay too much

    Poor post-merger/acquisition integration

    POST-MERGER INTEGRATION
    -Create a dedicated integration team -Think about how much has to be integrated -Due Diligence is not just about the other firm -Communicate, Communicate, Communicate -Pace & Speed are important -Formulate day-1 priorities -Establish metrices to evaluate progress -Promote champions remove cancers -Cultural sensitivity matters

    PROCESS OF VALUATION
    DISCOUNTED CASH FLOW

    Step 1.Calculate the cost of capital Cost of Equity= Risk free rate of return +Beta (Market Rate of Return- Risk free rate of return) Cost of Debt=Interest rate on Debt * (1-tax rate) Weighted Average Cost of Capital =(Percentage of debt*Cost of Debt)+(Percentage of Equity*Cost of Equity) Step 2. Determine free cash flows EBIT (1-t)+ Non cash expenses-Capex-Incremental Working Capital Step 3.Calculate present value of cash flows Step 4. Calculate terminal value and add present value of terminal value Terminal value=cash flow in terminal year *(1+constant growth rate assumed for the firm beyond terminal year )/(Cost of capital- constant growth rate assumed for the firm beyond terminal year) Step 5. Subtract debt

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