Merger and acquisition activity continues to be at the core of corporate banking. On this Euromoney Financial Training course you will learn about structuring and financing transactions and sound company valuation techniques to help form a successful deal. The programme will also bring about an understanding of buyers and sellers' motivations, the problems encountered when advising clients and how to overcome them through negotiation. In addition the course will pay special attention to the role of due diligence and its impact on value. Furthermore, it will focus on new areas of activity such as arbitrage strategies in M&A situations.
 
How will this course assist you?
 
On this 4-day training programme you will:

• Enhance shareholder value through better capital structuring decisions for acquisitions.
• Obtain a greater awareness of how to structure and finance mergers and acquisitions.
• Examine the principles involved in structuring highly- leveraged transactions.
• Develop an understanding of the due diligence process and learn how risk can be managed and mitigated.
• Develop negotiating skills in the M&A process.

Who Should Attend?

• Finance Directors
• Members of M&A teams
• Management and Strategy Consultants
• Strategic Planners
• Market Regulators
• Investment Directors

Supported by:

 

Day 1

Prerequisites to a successful deal

Session 1: key steps in the M&A process

• Strategic decision making: do companies need to grow?
• Acquisition vs.P 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?
• Case study: identify causes of failures from some spectacular M&A disasters.

Session 2: 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 3: 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 4: M&A valuation - cash flow 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 and structuring

Session 1: 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 2: 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 3: valuation triangulation

• Using comparable deals as valuation benchmarks.
• When are comparable deals not relevant.
• Measuring the value indicators.
• Measuring the premium for control.
• Case study: undertake a competitive negotiation to price an acquisition.

Session 4: the impact on 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.

Day 3

Financing the acquisition

Session 1: 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: earn-outs.
• Case study: equity bridge by international acquirer.

Session 2: negotiation - bridging the valuation gap

• Developing a range of values.
• Establishing maxima and minima.
• Earn outs as a tool.
• Disadvantages for purchaser and vendor.
• Case study: structuring an earn out formula for an acquisition.

Session 3: public M&A transactions

• Takeover codes, practices.
• Documentation.
• Impact of friendly vs. hostile on price, due diligence, financing.
• Strategies and tactics, implications for defence.
• Regulatory issues.
• Case study: role-play as shareholders in a hostile takeover.

Session 4: 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 buy-out process.
• Case study: estimating returns in a recent buy-out of a buy-out (BOBO).

 

Day 4

Financial acquisitions: Public to Private (P2P)

Session 1: 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 2: exit routes for private equity investors

• Comparative analysis of the alternatives.
• IPO as a first step, advantages.
• Leveraged recapitalisation as an exit.
• Leveraged recapitalisation as a bid defence.
• Case study: secondary and tertiary buyout analysis.

Session 3: 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 4: M&A arbitrage trading

• Hedge fund strategies in M&A situations.
• Liquidity costs.
• Outcome analysis.
• Risk-return trade-off.
• Vendor due diligence.
• Closing the deal.
• Case study: compete to run arb trading positions in a takeover.
  

 

• Paul Richards

  Paul Richards graduated from Cambridge University in mathematics and has a Masters degree in business administration from London Business School. He is also a CFA charter holder, an Associate of the Chartered Institute of Bankers, a Member of the Association of Corporate Treasurers and a Fellow of UKSIP.
  
  Paul has more than 20 years investment banking experience specialising in domestic and international corporate finance at UBS (Warburg), HSBC and Map Securities (part of Skandia Insurance and Mapfre, Spain). He was also the chief executive of the London merchant banking operation of Credit Industriel et Commercial, a major French banking group.
  
  As a result of this experience, Paul has extensive first hand experience of: Mergers and acquisitions; IPOs; bond issues; secondary market issues; privatisation; debt syndications; corporate treasury; equity valuation; investment analysis; security and derivative valuation; private equity; modelling; corporate governance; and compliance. 
  
  Paul won the 2004 Wincott Foundation Prize for his article "Lessons in shareholder value" on the boom and bust in new economy stocks, published in Professional Investor (the journal of the UK Society of Investment Professionals - the UK member society of the CFA Institute). He has taught MBAs and Masters to Finance students at Cass and Cranfield Business Schools for more than 12 years in a range of financial disciplines; and has trained staff at major City houses and in banks on different continents.

  Courses run by this instructor

  • IPOs: Managing, Underwriting and Pricing

Mergers and Acquisitions

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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