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