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Modelling for Mergers & Acquisitions Masterclass

Master the Modelling of Integrated Financial Statements

Modelling for Mergers & Acquisitions Masterclass

A two-day course

This course is a ‘must know’ for;

  • M&A professionals at all levels already familiar with basic M&A modeling, who want to refresh and develop their modelling skills through a more in-depth analysis;
  • Financial Analysts seeking to develop their M&A modelling skills in integrating acquirer and target financial statements into a fully integrated 3-statement consolidated model; and
  • Corporate Finance professionals, who want to analyse M&A with greater precision, by calendarizing acquirer and target financial statements and considering the impact of a stub period between the completion date and acquirer’s financial year end.

  • This course is relevant with practical examples and illustrations from recent deals
  • The trainer has qualified as a Chartered Accountant and well qualified to understand both the accounting and financial aspects of the workshop
  • He has spent time working on building models to incorporate the financial effects of various types of transactions

  • Learn how to build a standard M&A model, which analyses all the key financial issues on an M&A transaction (sufficient for pitch purposes)
  • Learn how to build a fully integrated M&A model, combining acquirer and target financials
  • Learn how to analyse and model the proforma financial effects of different types of disposal and the different uses of proceeds

Day One

M&A Analysis and Modelling

During this course, you will build a fully integrated merger model which combines financial statement forecasts for an acquirer and target company. Practical consolidation issues are addressed. The deal analysis focuses on the financing structure, pricing, earnings and credit impact of the deal. The three main ways of determining value creation for acquirer shareholders are emphasised, namely EPS accretion/ (dilution), Return on Invested Capital and PV of Synergies vs. Bid Premium paid.

As a case study, we will consider the hypothetical acquisition of Adidas by Nike, and build both ‘short form’ and ‘long form’ models.

Individual exercises will be undertaken to highlight the 3 key measures of value creation:

  • EPS accretion/ (dilution)
  • Return on Invested Capital
  • Present Value of deal synergies vs. acquisition premium paid to target shareholders

Key topics:

  • Preparing the stand-alone data for acquirer and target
  • Preparing key deal data
  • Building a flexible funding structure using a sources and uses of funds table
  • Calculating deal goodwill
  • Accounting for a Non-Controlling interest
  • Enterprise Value to Equity Value bridge and deal adjustments in private M&A
  • Dealing with fair value adjustments to the target's net assets
  • Dealing with refinancing of target's debt
  • Modelling fees (advisory, debt-issuance and equity-issuance)
  • Consolidating the financial statements of acquirer and target
  • Synergies
  • Assessing the valuation creation potential of the deal using:
    • Earnings accretion / dilution and relative P / E analysis
    • Return on invested capital (ROIC) analysis
    • Net present value of synergies vs. control premium
  • Contribution analysis
  • Impact on credit ratios and ratings
  • Analysis at various prices (AVP)
  • Identifying the maximum offer price and a suitable financing mix

Day Two

Divestiture Analysis and Modelling

This course examines the main divestiture structures available to a firm. The advantages and drawbacks of each structure are explained and their balance sheet impact is analysed in detail. Excel exercises and cases are used throughout the course.

Our main case study will be the hypothetical divestiture of Primark from Associated British Foods plc. We will consider the impact on the group’s accounts under the various alternative divestment structures.

Individual exercises will be a performance to demonstrate the income statement and balance sheet impact of each structure.

Key topics:

  • Overview of divestiture alternatives available to firms
    • Divestiture (private sale and IPO)
    • Spin off/ De-merger
    • Split off
    • Equity carve-out
  • Creating the balance sheet post-deal
    • Deconsolidation process
    • Calculating the gain on disposal, including tax
    • Tax basis vs. book basis of investment sold
    • Dealing with non-controlling interests
    • Adjusting the capital structure of the business to be divested / restructured
    • Proforma leverage ratios
  • Use of sale proceeds and scenario analysis
    • Operating investments (capex or business acquisitions)
    • Investments in financial assets
    • Repayment of debt
    • Repurchase of shares
    • Special dividend
    • Proforma EPS analysis, including using relative P / Es

After graduating from Cambridge University in 1993, the trainer worked as an auditor with Arthur Andersen, gaining a comprehensive knowledge of corporate accounting and financial statements. He qualified as a chartered accountant (ACA) and then worked in investment banking in the City of London, initially with HSBC and subsequently at Merrill Lynch. Throughout his time in the City he was in a front-office role, advising companies on valuation, financing, acquisitions, foreign exchange and derivatives. This breadth of practical experience together with his passion for sharing and communicating knowledge, naturally then led him towards a career in financial training.

He has worked in financial training for the last ten years and delivered training courses on accounting, financial modelling, corporate finance, valuation and capital markets at investment banks, private equity and corporate finance firms throughout the world.

This two-day workshop will guide participants through the mechanics of modelling M&A transactions with the end results which can be used to evaluate deals, both from a buyside and sell-side perspective (i.e. both acquisitions and divestments).

  • Good and knowledgeable lecturer.

Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements

Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS

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