M and a Deal Structuring and Analysis

The aim of this new one-day course is for participants to build a (tutor led) merger model in class using 2 real life companies. This model will be fully functioning and flexible. You must be comfortable with the M&A accounting concepts as these are assumed knowledge for this course. You also need good basic Excel skills to attend. A good merger model will indicate whether an acquisition is worth doing, at what price it becomes worth doing and how it should be financed. The modeling of an acquisition will require a lot of assumptions, adjustments and detailed calculations to understand whether the transaction is EPS dilutive or accretive to the acquirer’s shareholders and to assess the impact of the transaction on the bidder's credit rating.

Key Learning Outcomes:

• Build a merger model using real life companies
• Understand the uses and sources of funds including equity acquisition costs, share options, refinanced debt, bidder’s cash, new debt…
• Consolidate pro forma group balance sheets and group income statements
• Understand whether an acquisition is worth doing, at what price it becomes worth doing and how it should be financed.

Brief Review of M&A Accounting

• Acquisition accounting
• Goodwill calculation
• Non-controlling interests
• Joint ventures and associates

Preliminary PE Analysis - is it Worth Doing?

• PE of Bidder and PE of Target
• PE of Cash

Building a Flexible Funding Structure Using a Sources and Uses of Funds Table

• Uses of funds - how much is it going to cost?
• Equity acquisition costs
• Share options, LTIPs
• Refinanced debt
• Pension funding requirements
• Fees
• Sources of funds - what funding mix will we use?
• Bidder's cash
• Equity and the impact on weighted average number of shares
• New debt

Approach to Consolidating Pro Forma Group Balance Sheet

• Preparation of the Bidder's financials
• The investment in the Target
• Account for the sources and uses of funds
• Preparation of the Target's financials
• Fair value uplifts
• Calculate and bring in goodwill
• Consideration transferred
• Acquisition date fair value of net assets vs. market value
• Non-controlling interest valuations
• Consolidate

Approach to Consolidating Pro Forma Group Income Statement

Bring in the Bidder's forecast income statement

Bring in the Target's forecast income statement (12 months)

Account for adjustments arising from combination

Revenue and cost synergies - including phasing issues

• Interest adjustments
• Fair value unwinds
• Tax shield impacts

The Outputs

• Earnings accretion/dilution
• Credit ratios and implied post-transaction credit rating
• Value creation potential of the deal
• Identifying the maximum offer price and a suitable financing mix

Free Course Reference Guide

The Complete Financial Modeler is included as part of the programme (Normal RRP £80).

This 150+ page reference guide, taken from Fitch Learning’s “Complete Investment Banker” manual, is designed to act as a comprehensive and practical Excel and modeling reference guide. It helps users become more proficient at taking an idea or objective and turning it into a robust, flexible model. It is relied upon globally by our clients to support further training after their course. The guide is applicable for professionals at every level, from Intern through to Managing Director. It contains the clearest explanation and application of technical Excel content in a way that makes it accessible to all.

The programme also includes our Excel Short Cut that includes quick access to 40 of the most commonly used shortcuts.