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Euromoney Learning Solutions

Mergers & Acquisitions Training Week

Oct 7—11, 2019
5 days
Singapore, Singapore
USD 5595
USD 1119 per day

How it works

Disclaimer

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Description

Gain an understanding of international sales & purchase of companies

This programme contains 2 modules:

Module 1: Mergers & Acquisitions (Day 1 - 3)

Module 2: Mergers & Acquisitions Documentation & Negotiation (Days 4 - 5)

At the end of this programme, the participants will be able to :

  • Differentiate between a public and a private M&A process
  • Understand the timing and key elements of a tender offer
  • Analyse the key steps for the different private M&A processes;
  • Detail the main documents present in an M&A transaction
  • Explain where synergies are derived from
  • Based on annual reports and forecasts, perform all the key valuation methodologies: DCF, trading multiples and LBO
  • Understand the different forms of consideration and financing available
  • Analyse the key metrics looked at by an acquirer: accretion/dilution, pro forma balance sheet, synergies paid away, etc.
  • Differentiate between the different divestitures alternatives and understand their key impacts

Methodology

This programme is a mix of lecture, class discussions, exercises and in-depth case studies.

Audience

This programme assumes a basic knowledge of finance and understanding of financial statements.

Agenda

Day 1

Prerequisites to a successful deal

Session I: key steps in the M&A process

  • Strategic decision making: do companies need to grow?
  • Acquisition vs. organic growth
  • Strategic considerations
  • Types of transaction: strategic or financial
  • Developing a strategic approach to acquisitions
  • Screening potential targets
  • Deals from hell
  • What is success?
  • Types of synergies: operating or financial
  • Revenue enhancement or cost cutting

Case study: Identify causes of failures from some spectacular M&A disasters.

Session II: growth by acquisition, by joint venture or organically

  • Types of synergies: operating or financial
  • Revenue enhancement or cost cutting
  • Cut the fat not the muscle
  • Advantages of each expansion route
  • What can go wrong?

Case study: An acquisition in the airline industry

Session III: due diligence - friendly/hostile deals

  • Legal risks in acquisitions
  • Mitigating risk via due diligence
  • Legal protections
  • Credit risk in the event of a problem
  • Impact of the nature of the transaction (friendly / hostile) on due diligence

Case study: Issues arising in due diligence for a carve-out

Session IV: M&A valuation - cashflow approach

  • How value is driven by cashflows rather than profits
  • Calculating free cashflow
  • The value drivers and the basis of cashflow valuation
  • Cost of equity: dividend models
  • Capital structure concepts
  • Cost of debt: coupon vs. yield, market vs. book value
  • The cost of equity

Day 2

Valuation & Structuring

Session I: using WACC to value an acquisition target

  • Developing a model of cashflows
  • Estimating the terminal value
  • The steady state scenario
  • Sensitivity analysis of the terminal value
  • Checking assumption integrity

Case study: Valuation of an acquisition prospect using WACC

Session II: multiples based valuation techniques

  • Asset valuations: forced sale vs. going concern
  • Price / earnings multiples
  • Earnings related multiples: EV / EBIT(DA)
  • Other multiples: sales, book value, per subscriber
  • Selection of comparable companies

Case study: A break-up analysis for a global brand

Session III: the impact of the financials of the bidder

  • Financial analysis: producing pro forma projections
  • Valuing synergies and assessing the reality of achieving them
  • Analysing the effect of synergies on financials including earnings
  • The breakeven price earnings ratio for debt
  • Establishing the amount of debt that can be used
  • Using bridge finance pending equity or debt issues

Case study: Pro forma analysis of an acquisition prospect

Session IV: financing the acquisition and deal structuring

  • Assessing the impact on the value of the acquirer's shares
  • Paying with shares or cash or a combination? Pros and cons of each
  • Event risk and capital structure objectives
  • Underwriting a share issue
  • Bridging the valuation gap: earnouts

Case study: Pro forma analysis of an acquisition prospect

Day 3

Financial acquisitions: public to private (P2P)

Session I: financial acquisitions - leveraged buyouts

  • Types of leveraged transaction: LBO, MBO, MBI, BIMBO, SBO, P2P
  • Acquisitions suitable for leveraged finance
  • LBO analysis as a valuation metric
  • LBO deal structuring: equity and debt
  • The leveraged buyout process

Case study: Estimating returns in a recent buy-out of a buy-out (BOBO)

Session II: capital structure in LBOs

  • Senior debt multiples
  • Mezzanine: cost and use of warrants
  • Second lien financing
  • Providers of capital
  • Remuneration of equity capital providers
  • Bridges to second stage financings

Case study: Leveraged LBO financing for a P2P

Session III: disposals - the process

  • When to announce
  • The data room
  • Timetable
  • Presentations to potential purchasers
  • The short list
  • Vendor due diligence
  • Closing the deal

Case study: Accelerated IPO as a disposal option

Session IV: M&A arbitrage trading

  • Hedge fund strategies in M&A situations
  • Liquidity costs
  • Outcome analysis
  • Riskreturn
  • tradeoff
  • Vendor due diligence
  • Closing the deal

Case study: Compete to run arb trading positions in a takeover

Day 4

Key M&A Documents

  • Confidentiality agreement
  • Teaser/Information Memorandum
  • Head of terms/Letter of intent
  • Exclusivity agreements
  • Sales & Purchase Agreement (SPA)
  • Shareholders agreement
  • Management agreement

Focus on the SPA

  • The skeleton structure of a contract
  • Boiler plate – what’s covered
  • Recitals
  • Assets vs. share
  • Price and payment structures
  • Representations & warranties
  • Disclosures
  • Covenants
  • Indemnities
  • Condition precedents
  • Other relevant matters

Completion and Price Adjustment Mechanism

  • Locked box vs. completion accounts: pros/cons and key issues
  • Cash free/ debt free
    • Cash vs trapped cash
    • Debt – what is included?
  • Adjustments for working capital & capex
  • Receivables
  • Inventory
  • WIP – problem areas
  • Normalised working capital
  • Normalise capex level
  • Other adjustments to the price – warranties & indemnity claims

Day 5

Soft Kills to Negotiate an SPA

  • The ten fundamentals principles to negotiation techniques
  • Set maximum and minimum objectives
  • Keep analysing the deal variables
  • Always aim high
  • Never give a concession – always trade it
  • Keep the whole relationship in mind
  • Know when to walk away from a deal
  • Know the negotiation process
  • Have a BATNA (Best Alternative To a Negotiated Agreement)
  • Select an effective negotiation strategy
  • Change your strategy if necessary but never change your BATNA
  • The six rules of influence: reciprocation, scarcity, authority, commitment, liking and consensus
  • BATNA
  • Before the negotiation, decide what you will do if nothing comes of the negotiation
  • Unless you have a plan B, your anxiety may reach dangerous levels
  • BATNAs set the threshold in terms of the full set of interests that any acceptable agreement must exceed
  • Both parties doing better than their BATNAs is a necessary condition for an agreement
  • Zero sum fallacy
  • Participant's gain (or loss) is balanced by the losses (or gains) of other participant(s)

Final Case Study

  • The participants are split into two groups
  • A buyer (a multinational company) and a seller (a private equity firm)
  • The key focus will be on negotiating and executing deals smoothly and correctly to the best interest of the parties while arriving at an acceptable solution for both parties
  • The participants will role-play the M&A negotiation in two rounds

Round I

  • The seller has been running a competitive process and has received non-binding offers
  • One of the buyers is trying to obtain an exclusivity and has asked for a meeting with the seller to discuss their bid and the key clauses of the SPA.

Round II

  • The interested buyer has been granted exclusivity and is negotiating the following SPA clauses:
  • The price adjustment mechanism: locked box vs. completion account
  • An earn-out or deferred payment structures
  • The potential adjustments to working capital and capex
  • The representation & warranties and related indemnities
  • A pro or anti-sanbagging provision
  • A MAC clause

Experts

Serge is an experienced Corporate Finance professional with over 20 years’ experience in M&A and capital market transactions. He has successfully completed in excess of EUR 30 billion across multiple geographies (US, Europe, MENA).He began his career as a Credit Analyst at Banque Continentale...

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Next dates

Oct 7—11, 2019
5 days
Singapore, Singapore
USD 5595
USD 1119 per day

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