Mergers & Acquisitions

COURSE OBJECTIVES: A 3-day training course dedicated to the valuation, structuring, financing and negotiating of M&A transactions Evaluating and pricing acquisitions Creating shareholder value through rigorous pre-merger analysis Identifying and assessing different synergies Negotiating the terms of the deal Managing post-acquisition integration Financing and structuring the deal KEY ISSUES Some of the issues to be explored: How should a target company be valued? How does the method of valuation affect the availability of funds from banks, institutional investors and private equity investors? How can one assess the potential gains from an acquisition? How dependable are these projections, from an investor's viewpoint? What are the key features of due diligence? How much money is needed for the transaction, including fees and restructuring costs? When should a company divest? What are the alternative ways of divesting a business? What are the key terms and conditions, covenants and pricing, of different sources of acquisition finance, including subordinated notes, mezzanine finance and high yield bonds? What are the essential features of leveraged buyouts? How can one structure the financing of an LBO to raise the funds needed without losing control? WHO SHOULD ATTEND? M&A Specialists Corporate Financiers Commercial and Investment Bankers Analysts Investors Finance Directors Lawyers All those involved in Buyouts and Acquisitions
DAY 1 Corporate Finance, Strategy and the Economics of M&A The decisions that create shareholder value Investment, financing, payback and risk management Managers’ vs shareholders’ vs lenders' interests: the agency problem Why M&A drives the market for corporate control Mergers and acquisitions: when do they make sense? MINI-CASE STUDIES: Wärtsilä NSD, Sterling Drug, AOL-Time Warner The distinguishing features of successful and unsuccessful deals Research evidence on which mergers add value, and which destroy value The four sources of acquisition value CASE STUDY: The SBC-AT&T Merger. Delegates seek to isolate the potential synergies in a merger of two mature telecoms companies. Developing an Acquisition Strategy Define your acquisition objectives Establish specific acquisition criteria Selecting advisors Is it the right target? How is the company's "wish list" determined? Is the market going to like the deal? Why? What is the economic vision in the deal that justifies it? How much dilution in the buyers' stock price will there be? What does it take after doing the deal to make it all work? Evaluating and Pricing Acquisitions, and Undertaking Due Diligence What are the target's value-drivers? Required performance improvements embedded in acquisition premiums Competitive conditions that must drive valuations What due diligence can reveal – and what it cannot The winner ’s curse and morning-after woes CASE STUDY: The Acquisition of Allied Colloids. Delegates will follow the sequence of events in this cross-border merger and develop a due diligence checklist. Tailoring due diligence to the company and industry CASE STUDY: New York Magazine. What are the key aspects of due diligence in the publishing world?. Valuation in Mergers and Acquisitions: Tools Asset-based and balance-sheet approaches Market value approaches Multiples and comparables Enterprise value and EBITDA Establishing required rates of return Free cash flows to equity Free cash flows to firm Dividend- and cashflow-discount models CASE STUDY: Active Generation. Delegates value a private company for acquisition, using both comparables and cash flow methods and incorporating the results of potential synergies Real option approach Distress situations Blank-check acquisition companies Application: Jamba Juice. Where's the value added? DAY 2 Valuation in Mergers and Acquisitions: Applications Restructuring checklist Total cost computation Valuing the combined company Break-up valuation Synergy analysis Sensitivity analysis CASE STUDY: MTC-Celtel. Delegates value the synergies resulting from a potential acquisition, adjusting for risk and cost-of-capital effects and employing sensitivity analysis on the hoped-for synergy gains. Negotiating a Merger Role of investment bankers and other advisors Developing a negotiating stance Understanding sellers' goals and constraints Dealing with defensive strategies: poison pills and other devices MINI CASE STUDY: Goldfield's Anti-takeover Defenses Dealing with rival bidders Dealing with private owners Structuring the deal: How much should we pay? How should we pay? The proposed basic Term Sheet Keep the romance alive during due diligence and while you secure financing Closing the deal CASE STUDY: Lifetime-AGI. Delegates engage in a hands-on negotiating exercise including valuation, setting the price and payment terms of the merger, and negotiating control Post-Merger Integration Major factors determining success of post-merger integration Checklist of areas of risk Compensation and motivation issues Setting milestones Divestitures CASE STUDIES: Penn State and Guisinger, Lacsa and Taca. Delegates discuss pitfalls and alternative approaches to post-merger integration success. They prepare an action plan for the effective integration of two companies. Divestitures Post-acquisition divestitures Measuring and managing break-up value Taxable and tax-free corporate breakups Before-and-after divestiture analysis CASE STUDY: Caterpillar. Delegates learn how to perform a before-and-after divestiture valuation DAY 3 Financing Acquisitions Finding the optimal capital structure: debt, equity or mezzanine? Capital structure considerations Senior secured bank financing Asset-based finance CASE STUDY: Island Appliances: Financing acquisitions at a retail company Bridge financing Mezzanine debt High-yield bonds Subordinated seller notes and earn-outs Private equity sources Refinancing strategies CASE STUDY: Le Meridien. Delegates evaluate a variety of creative financing techniques in the context of this challenging acquisition situation. Leveraged Buy-Outs The different approaches of financial vs strategic buyers The leverage effect Sources of debt finance Management vs outside equity Example of spreadsheet-based debt capacity analysis for leveraged finance Focus: synthetic ratings and debt pricing How to structure and price the leverage for an acquisition or buyout CASE STUDY: Nukem Security Services. We plan the financing of a leveraged acquisition. Focus: mezzanine and private equity finance Valuation in LBOs: “The VC Method” Paydown and exit analysis CASE STUDY: Flexics. Delegates employ the tools and ideas of the course to a competitive situation featuring a leveraged buyout and sale to a strategic buyer. They negotiate key features, including: Valuation of the target Raising the funding Terms of payment Summary "term sheet" agreement Summary and Conclusions