Mergers & Acquisitions (« M&A ») training
Training provided by Ferdinand Petra (in English or French)
Extracts of slides used buring this training: merger (share exchange)
- What is an M&A transaction?
- The M&A in the context of maximizing shareholders’ value
1. Fundamentals and historical perspective on the M&A market
- Good reasons to do an M&A operation
- Bad reasons to do an M&A operation
- All parties involved in an M&A transaction
- M&A waves de M&A au XXième et XXIième siècle
- Focus on M&A waves since the 80’s
- Drivers of M&A operations
- The M&A market last year
- Current drivers of the M&A market
2. Actors, process and tactics in M&A
- Advising banks
- Typology of M&A banks
- Technical advisors
- Private Equity funds
- Sell-side process of a company (or division)
- Different steps of the auction process
- Main documents of the auction
- Teaser
- Information Memorandum
- Process letter
- Management Presentation
- Share Purchase Agreement (SPA)
- Bridge between the value of an asset (or company) to its price
- Private negotiation process
- Targeted sell-side process and « dual track »
- Comparative analysis of the different sell-side processes
3. Sale of shares for cash
- Impact of the transaction on the non-consolidated accounts of the acquirer
- Financial impact for the acquirer and the bank(s) that finance the transaction
- Impact of the transaction on the income statement of the acquirer and on its Earnings per Share (EPS) – Accretion/dilution impact
- P/E rule related to a purchase 100% in cash
- Computation of synergies to break-even in case of an EPS dilutive transaction
- Difference between EPS accretion/dilution and value creation
- Computation of goodwill (IFRS 3)
- Build up of the opening balance sheet of the acquirer post-transaction
- Pros & Cons of a share purchase with cash for both the acquirer and the seller
4. Share exchange
- Computation of the relative weights of equity values
- Computation of the exchange parity
- Impact of such transaction on the uncolsidated accounts of the acquirer
- Financial consequences for the acquirer and the target
- Use of a contribution analysis to compute the exchange ratio of the transaction
- Legal process needed in such operation
- Extraordinary general assembly notice
- Shareholders’ agreement: anti-dilutive provisions, drag along, tag along…
- Impact of the transaction on the acquirer’s income statement and its EPS – concept of accretion/dilution
- P/E rule for an exchange of shares transaction
- Build up of the opening balance sheet of the acquirer post-transaction
- Legal process of a merger (case of continental European mergers)
- Pros & Cons of a share exchange for the acquirer and the target
5. Asset contribution
- Specific example of the contribution of all operating assets and liabilities
- Computation of relative % ownership of the acquirer post-transaction
- Build up of the opening balance sheet of the acquirer post-transaction
- Financial impact for the acquirer and the target contributing the assets
- Legal process of an asset contibution
- Impact of the contribution on the income statement of the buyer and its EPS – concept of EPS accretion/dilution
- Pros & cons of an asset contribution for the buyer and the target contributing the assets
- Tax impact of a share purchase vs. an asset purchase/contribution: goodwill amortization and asset step up
6. Sharing of synergies during an acquisition or a merger
- Definition and examples of the different types of synergies
- Valuaton methods for synergies
- Sharing of synergies in the case of a share purchase with cash
- Sharing of synergies in the case a a share purchase with a mixed offer (cash and shares)
- Sharing of synergies and its impact on the maximum price an acquirer can pay a target
