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