Relier Pairs M and V 3Version en ligne mergers and valuations par alex kellett 1 Merger Cycle 2 signature event 2 Merger Cycle 2 3 Qualitatives 4 Merger cycle 1 signature event 5 Merger cycle 4 6 Merger success: selling company 7 Merger cycle 3 signature event 8 Gearing ratio 9 Epstein 10 Merger success from the perspective of continuing major shareholders 11 Why TAPP 12 Merger Cycle 1 13 Merger phase 1 14 Merger cycle 3 15 Event studies 16 Merger Phase 3 17 Merger cycle 4 signature event 18 Merger phase 2 19 Revenue synergies 20 A 25% phase 4 APP 21 MergVal 22 White Knight 23 3rd wave: Subprime aka 24 Merger Monday 25 Merger Success: Dealmakers, bankers, advisers etc. 26 Merger Phase 4 typically allows subsidiary company to run their own operations (preserves subsidiary structure). They agree to limit their role to providing financing and developmental support as needed. (15% conglom discount) December 2011-19: Megaboom Countrywide financial acquisition may be equiv to 3x the financial APP as the comparable %APP consummated in Phase 1 % of long term debt to total capital. The after tax cost of equity is 2-2.5 times that of debt. WACC Share prices of target are always expected to increase following a serious bidder's EOI. This usually corresponds to a near-exact matching decline in the share price of acquirer (pay control premium) RMT. Sellers seek to maximise the pv of cash equivalent returns over the period at which the board deems the company eligible to entertain offers (eg 6 months). (AMS: bidders + rounds) economy still perceived as in recession by many. A few 1-2 year cash paybook deals. APP 10-18% Financial Times: 13.01.2014. 'The date it is safe to do mergers again'. 3 major acquisitions announced on this date. Merger boom legitimised, laggards criticised. Catch up deals. APP% quickly over 50%. 1982-90: LBO RJR Nabisco Acquisition Netscape and Worldnet IPOs reflecting the synergy vs premium principles of modern best practice merger valuation (VG and IVE) Late cycle deals often over 100% APP until: increasing failures; declining target quality + reduced merger financing cause exhaustion peak narrow self-interest. close as many deals as possible (deal flow and financial volume). No fee unless deals close; only min legal and no financial liability for value-destructive merger advice. CF and synergies remain constant/increase very gradually during an M&A cycle but share price may triple. It better illustrates the importance of anticipatory purchase premium on APP (financial >%) Universal Banking (Travelers/Citicorp). led to repeal of US Glass-Steagall Law. (Deregulation spurred merger activity) Commercial banks chasing IP profit and prestige. qualitative. Only one subject: Chase/Bank one Facebook and LinkedIn IPOs 2002-08: Subprime 5 year min ownership position. reflects primacy of the party putting up risk capital: RMT: a) returns vs cost of capital. b) The deficit (APP) vs the pv of conservatively and independently determined NRS. Financing more available as overall M&A vol grows. APP = 20-35% 1996-00: Dot Com 1 merger evaluators who solely rely on subjective criteria evaluated on a cash flow effect basis only (as with all syn).
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