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