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FINANCIAL MARKET COURSES

Corporate Finance – Acquisition Analysis

The most important element in any acquisition process is the expected synergies to be realized through the acquisition. The more synergies that can be reasonably expected, the higher the price an acquirer will be willing to pay for the company to be acquired.

 

This course looks at the importance of synergy in determining the ultimate value of an acquisition. It describes how acquisitions can be quantified and valued using a free cash flow or an economic profit approach. In both cases, synergy is discussed as the primary driver of value in the analysis of acquisition candidates, and the need to quantify the synergies properly is addressed.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Outline the reasons why a company may want to engage in an acquisition

    Quantify an acquisition using a free cash flow (FCF) approach

    Quantify an acquisition using an economic profit approach, and recognize how both economic profit and FCF yield the same answer with respect to acquisition valuation

  • COURSE OUTLINE

    Topic 1: Fundamentals of Acquisition

    Reasons to Acquire Companies

    Reasons to not Acquire Companies

    Historical Perspective on Acquisitions

    o 1960s-1970s

    o 1980s

    o Recent Years

    Topic 2: Quantifying the Value of an Acquisition – FCF Approach

    FCF Acquisition Analysis – Basic Tasks

    FCF Acquisition Analysis

    FCF Acquisition Analysis – Alternative View

    Synergy Quantification

    The Premium Price

    Acquisition Analysis

    o Step 1: Analysis of Value Received

    o Analysis of Value Received – Example

    o Sept 2: Analysis of Purchase Price

    o Price Parameters

    o Impact of Purchase Price on Free Cash Flow

    Topic 3: Quantifying the Value of an Acquisition – Economic Profit Approach

    FCF or Economic Profit?

    o Acquisition Analysis – Economic Profit Example

    o Impact on Purchase Price on Economic Profit

    Conclusion

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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