Relier Pairs M and V 3Version en ligne mergers and valuations par alex kellett 1 Merger success: selling company 2 White Knight 3 Merger Cycle 2 4 A 25% phase 4 APP 5 Merger Success: Dealmakers, bankers, advisers etc. 6 Gearing ratio 7 Merger Cycle 1 8 MergVal 9 Merger cycle 3 signature event 10 Merger Phase 4 11 Why TAPP 12 Merger Phase 3 13 Epstein 14 3rd wave: Subprime aka 15 Merger phase 2 16 Merger cycle 1 signature event 17 Qualitatives 18 Merger cycle 3 19 Merger Monday 20 Merger success from the perspective of continuing major shareholders 21 Event studies 22 Merger phase 1 23 Merger cycle 4 24 Revenue synergies 25 Merger Cycle 2 signature event 26 Merger cycle 4 signature event Financing more available as overall M&A vol grows. APP = 20-35% Late cycle deals often over 100% APP until: increasing failures; declining target quality + reduced merger financing cause exhaustion peak 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. 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) may be equiv to 3x the financial APP as the comparable %APP consummated in Phase 1 RJR Nabisco Acquisition Countrywide financial acquisition 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) 2002-08: Subprime qualitative. Only one subject: Chase/Bank one evaluated on a cash flow effect basis only (as with all syn). Netscape and Worldnet IPOs 1996-00: Dot Com 1 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. economy still perceived as in recession by many. A few 1-2 year cash paybook deals. APP 10-18% Universal Banking (Travelers/Citicorp). led to repeal of US Glass-Steagall Law. (Deregulation spurred merger activity) Commercial banks chasing IP profit and prestige. % of long term debt to total capital. The after tax cost of equity is 2-2.5 times that of debt. WACC 1982-90: LBO December 2011-19: Megaboom 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 >%) merger evaluators who solely rely on subjective criteria Financial Times: 13.01.2014. 'The date it is safe to do mergers again'. 3 major acquisitions announced on this date. reflecting the synergy vs premium principles of modern best practice merger valuation (VG and IVE) 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. Merger boom legitimised, laggards criticised. Catch up deals. APP% quickly over 50%. Facebook and LinkedIn IPOs
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