This Euromoney Training course will provide you with all the necessary practical skills to successfully complete a corporate merger or acquisition. There is a core set of competencies that is required by professionals for successful mergers and acquisitions, whether acting for a company, investment bank or a consultant. These involve the ability to apply performance and valuation metrics to a universe of companies within an industry. The ability to produce sensible valuations, whose results flow transparently from an intelligible set of input assumptions, and the accounting and modelling knowledge to predict the consequences of financing structures on projected balance sheets and earnings forecasts. Increasingly, the line between public and private equity deals is becoming blurred, therefore the ability to model complex financing structures is essential to assess whether an LBO may or may not be an appropriate exit strategy.

How will this course assist you?

During this 4-day programme, course participants will:

• Estimate the impact of financing structures on pro-forma earnings and balance sheets.
• Screen a universe to find, compare and evaluate target companies.
• Produce stand-alone and with-synergy intrinsic valuations of companies.
• Estimate the cost of capital for going concerns, initial public offerings and targets for refinancing, including derivation of industry asset Betas.
• Assess targets for leveraged buy-outs using a quick-check modelling approach.
• Design and model financial structures for LBOs including several tranches of senior and subordinated debt.
• Understand the sensitivities and factors which lead to unsuccessful M&A transactions.
  

Who Should Attend?

• M&A Executives
• Investment Bankers
• Corporate Planners and Strategists
• Equity Analysts
• Investors
• M&A Accountants and Lawyers
• Credit Analysts

Supported by:

Day 1

Deal rationale, success or failure

• What drives corporate activity?
• Types of transaction.
• Good and bad approaches to transactions.
• The agency / principal problem.
• Mergers and game theory.
• Bootstrapping and accretion / dilution.
• Historical experience: a summary of what has worked and what has not worked.
• Case study: consider drivers to acquisition synergies in different industries.

Comparable company analysis

Why use multiples?

• Linkage to DCF valuations.
• Valuation multiples vs. performance metrics.
• Equity based multiples.
• Enterprise value multiples.
• Performance metrics: DuPont analysis and beyond.
• Reality check: which multiple and why?
• Case study: use comps template to interpret multiples of a target company. Relate to logic of potential acquisition.

Stand-alone valuation: estimating WACC

• The capital asset pricing model.
• Miller, Modigliani and the effect of financial leverage.
• Estimating the market risk premium.
• Leveraging and de-leveraging betas.
• Reality check: frequent problems in estimating a WACC.
• Case study: estimate a weighted average cost of capital by averaging unleveraged betas.

Unleveraged free cashflow

• Definition of free cashflow.
• Direct and indirect, leveraged and unleveraged free cashflow.
• Free cashflow forecasts: cyclicality, duration, investment requirements.
• Going concern vs. liquidation DCF models.
• Application to target company.

Day 2

• Terminal values: exit multiples and perpetuities.
• When to prefer multiples.
• Gordon growth model and perpetuities.
• Timing conventions and handling terminal values correctly.
• Reality check: reconciling exit multiples with perpetuity values.
• Case study: produce terminal values and reconcile assumed growth and multiple with implied multiple and growth.

Value-driver valuation and economic value added

• Implied vs. forecast long term returns on capital employed.
• DuPont analysis and implications for terminal values.
• Introduction to EVA.
• EVA terminal values: no-growth and incremental value added.
• Reconciliation of value-driver DCF and EVA valuations.
• Implications for mergers and acquisition modelling.
• Case study: revalue standalone target using explicit value drivers and discuss implications for a target company.

Estimating synergies

• Revenue enhancement.
• Fixed or variable cost reduction.
• Reduced capital requirements.
• Benefits from refinancing.
• Reality check: putting weights on synergies.
• Case study: revalue company including cashflow benefits from synergies and using a new imputed cost of capital. Determine an appropriate bid price.

Consolidating acquisitions

• New IFRS rules for consolidation.
• Accounting for investments.
• Accounting for associates.
• Consolidation of subsidiaries: establishing separable net assets and liabilities.
• Treatment of intangible assets.
• Goodwill: definition and impairment testing.
• New accounting rules for intangible assets.
• Implications of IFRS for valuations.
• Case study: produce pro-forma EPS estimate for acquisition funded by debt and then by equity.

Day 3

• EPS accretion and dilution.
• Why do companies worry about it?
• Debt vs. equity trade-offs.
• Bootstrapping and market manipulation.
• The mechanics of pro-forma EPS estimating.
• Reality check: EPS and dividend policy.
• Case study: produce pro-forma EPS estimate for acquisition funded by debt and then by equity.

Determining the right financial structure

• Introduction to dynamic merger model.
• Market conditions and the appropriate bid premium.
• Discussion of potential financing structure.
• Implications for pro-forma leverage and goodwill.
• Implications of comparable transactions analysis.
• Case study: calculate acquisition terms and resulting pro-forma levels of debt, equity and goodwill for acquisition of target.

Producing dynamic medium term pro-forma financial forecasts

• Contributions from the target.
• Contributions from synergies.
• Impact of refinancing on financial forecasts.
• Where to anchor to underlying model and where to recalculate.
• Dividend policy for the new group.
• Exit multiples.
• Case study: project pro-forma profit and loss, cashflow and consolidated balance sheets for combined entity, and recommend dividend payout policy. Review exit multiples in light of comparable company analysis.

Modelling balance sheet impact of disposals

• Types of disposal.
• Motives for choice of disposal.
• Gains or losses on disposal.
• Tax treatment of disposals.
• Accounting for disposal of assets.
• Accounting for disposals of equity stakes.
• Case study: produce pro-forma balance sheets for disposals of minority and majority equity stakes in a subsidiary.

Day 4

• Dynamic medium term modelling of partial and complete deconsolidation.
• Dynamic modelling and the deconsolidation of equity stakes in projections.
• Implications of deconsolidation for leverage and EPS.
• Using models to recommend appropriate disposal.
• Implications of deconsolidation for cashflow valuations.
• Case study: work with a deconsolidation model to recommend a disposal strategy for an overleveraged company.

Private equity: how and why

• Characteristics of private equity transactions.
• Rationale for LBOs: tax and discipline.
• Players and the agency / principal problem.
• Financial structures for LBOs.
• Senior debt tranching.
• Sources of gap finance.
• Case study: suitability of target company (or parts thereof) for LBO.

LBO quick check

• Drivers to LBOs and typical financial structures.
• LBO modelling not a valuation routine.
• Use of static numbers to derive worst case projection.
• Derivation of potential cumulative debt pay-down.
• Mechanics of simple equity IRR calculation.
• LBO as possible exit in M&A transactions.
• Case study: quick check on suitability of deal for LBO treatment.

Detailed LBO modelling

• Projection of unleveraged free cashflows.
• Calculation of free cashflow for debt service.
• Cashflow waterfall through debt service.
• Calculation of debt coverage ratios.
• Calculation of accurate IRR to equity.
• Additional issues in LBO modelling.
• Case study: production of detailed LBO model and assessment of suitability of transaction.

 

 

• Nick Antill

  Nick Antill read Economics and Politics at Bristol University and began his career in the oil industry, working for BP and Saudi Aramco. He subsequently transferred to the financial services industry, spending 16 years as an equity investment analyst, specialising in oil and gas companies. He was responsible for the European oil and gas research teams for a number of investment banks, notably ABN AMRO Hoare Govett, BZW and, finally, Morgan Stanley, where he worked during the latter part of the 1990s.
  
  At Morgan Stanley, he was personally responsible for writing investment research on the European integrated oil majors and for marketing it to investment institutions globally. This period coincided with a dramatic concentration of the industry, via wide-spread mergers, in which Morgan Stanley was a prominent advisor. Nick’s team wrote extensively on the drivers to corporate activity and its likely consequences.
  
  He has co-authored, with Robert Arnott, ‘Valuing Oil and Gas Companies’ (Woodhead Publishing, 1994 & 2000), an introduction to the oil and gas industry for financial professionals which focus on measuring company performance and deriving stock market values. He also co-authored, with Kenneth Lee, ‘Company valuation under IFRS’ (Harriman House, 2005 & 2008), a comprehensive introduction to techniques for company forecasting and valuation, along with the interpretation of financial statements published together with the International Financial Reporting Standards. It has also been translated into Russian.

  Courses run by this instructor

  • Oil & Gas Valuation

Mergers & Acquistions Modelling

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.

Company Analysis: Valuation, Forecasting and Modelling

12-16 Mar 2012 (London, UK)
2-6 Jul 2012 (London, UK)
3-7 Dec 2012 (London, UK)

This 5-day course will provide you with a wide range of fundamental analytical and forecasting skills, which will be of relevance in today's business, banking and financial services world.

London School of Corporate Finance

23-27 Apr 2012 (London, UK)
1-5 Oct 2012 (London, UK)

A 5 day practical "how to" financial training course taught by an internationally renowned corporate finance expert. The course takes you through all the forms of Corporate Finance from M&A to IPO's to LBO's. Strategy, structuring and valuation are key themes throughout, and upon return to your organisation you will be fully prepared to put your learning into practice.

Private Equity

25-27 Jun 2012 (London, UK)

This 3-day financial training course is about analysing, valuing and financing private equity deals

Financial Modelling in Excel

21-23 Mar 2012 (London, UK)
16-18 Jul 2012 (London, UK)
12-14 Nov 2012 (London, UK)

This 3-day course looks at constructing financial models and analysing their applications and uses

Mergers and Acquisitions

21-24 Aug 2012 (London, UK)

A 4-day training programme looking at structuring and financing M&A deals

Advanced Company Analysis Valuation and Financial Modelling

20-24 Feb 2012 (London, UK)
17-21 Sep 2012 (London, UK)

A 5-day case study based workshop covering advanced fundamental analysis and forecasting skills

IPOs: Managing, Underwriting and Pricing

3-6 Jul 2012 (London, UK)

A 4-day intensive programme about arranging, managing and pricing successful IPO's

Oil & Gas Valuation

14-17 Feb 2012 (London, UK)

This 4-day course provides the necessary practical skills to model and value oil and gas companies, from the perspective of an investor, an equity analyst or as part of a corporate transaction.

 

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