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Corporate Valuation – Merger Consequences Analysis

Merger consequences analysis is often referred to as an affordability analysis because it is used to determine what an acquirer could pay for a possible target. In this course, you will learn how to perform the mechanics of a merger consequences analysis. This includes determining the proposed transaction’s impact on EPS (accretion/dilution) and credit statistics.

  • OBJECTIVES

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

    Recognize the importance of affordability analysis by evaluating the possible accretion/dilution and the impact on the acquirer’s credit rating

    Describe the fundamentals of purchase accounting, especially the creation of goodwill

    Calculate the EPS impact of a transaction and the possible impact on credit statistics

    Evaluate whether a transaction is accretive or dilutive by comparing the acquirer’s price/earnings (P/E) multiple to the offer P/E multiple

    Outline other common complexities and considerations that arise in merger consequences analysis

  • COURSE OUTLINE

    Topic 1: Overview of Merger consequences

    What is a Merger Consequences Analysis?

    Determining Affordability

    Topic 2: Fundamentals of Purchase Accounting

    What is Purchase Accounting?

    Write-Ups

    Alternative Way of Calculating Goodwill

    Goodwill Creation – A Real Life Example

    Convergence of Global Accounting Standards

    Topic 3: Transaction Adjustments

    100% Stock Purchase

    100% Cash Purchase

    Balance Sheet Affordability

    o Pro Forma Debt

    o Pro Forma Interest Expense

    o Pro Forma EBITDA

    Topic 4: Other Analyses & Considerations

    What are other Analyses & Considerations?

    o Combination of Cash & Stock

    o Impact of Synergies on Pro Forma Earnings

    o Incremental Depreciation or Amortization from Write-Ups

    o Exchange Ratio Analysis

    o Pro Forma Ownership

    o Tax Considerations (US Corporate Tax Law)

    o Qualitative Issues

    Topic 5: Relative P/Es

    What are Relative P/Es?

    Relative P/Es – An Example

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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