Contemporary Merger Analysis - Intermediate Level

Course Description   This practical 2 day training is looking at current theory and practice of corporate M&A transactions. Delegates will have a chance to learn about different aspects of cross border transactions, methods of valuing synergies, use options in valuing target companies as well as how to value highly leveraged companies and liquidity. The course will also explain the metrics used to assess corporate transactions and why value creation is the best financial criterion. By the end of this course you will: Learn about the latest trends in M&A transactions Understand current theory and practice of corporate transactions, including ethics in M&A transactions Be able to analyse cross border transactions Use different methods to value synergies Explore the use of options in valuing transactions and the rationale for using options to value target companies (including the use of real option analysis) Be able to value highly leveraged firms Conduct the valuation of liquidity and control Understand the metrics used to assess corporate transactions and why value creation is the best financial criterion Course Level: Intermediate Prerequisites: To attend this course, participants should have an intermediate knowledge of accounting and corporate valuation

What Will You Learn

Main Topics Covered During This Training Analysing cross border transactions Adjusting cash flow, discount rate and valuation process in a cross border transactions Valuing synergies The use of option valuation in M&A transactions Valuing highly leveraged firms Managing liquidity Acquisition strategies - using value creation as an assessment tool

Who Should Attend Participants requiring an understanding of: The current topical debates in the M&A industry How more complex corporate transactions are analysed and valued should attend this course From Corporates, Investment Banks, Private Equity, Consulting, Accounting and Legal Companies: Equity Research, Analysts and Sales Equity Capital Markets Investment Managers Members of M&As Departments Corporate Financial Managers Corporate Development Corporate Finance Lawyers

The role of ethics in M&A transactions

• Why are ethics important?
• What constitutes good ethical behaviour and who are the interested parties?
• The consequences of ethical behaviour in transactions

Case study: Greenmail in practice

Cross border transactions   

• Basic principles of cross border M&A analysis
• How cross border transactions are different: home vs foreign valuation for a DCF valuation
• Adjusting cash flows in a cross border valuation
• Which discount rate, adjusting the cost of capital
• The valuation process with an adjusted CAPM approach

Case study: Valuation cases across borders

Valuing synergies in an M&A transaction

• The concept of synergies and value creation in M&A
• A framework for synergy analysis
• Estimating synergies, hard and soft synergies
• Estimating synergy value, the basic approaches taken and core concepts used

Case study: Synergies in a motor industry transaction

The use of option valuation in M&A transactions

• Option basics and option theory
• Applying options in practice and their limitations
• Types of real options and their use in M&A transactions
• How to assess the impact of real options

Case study: the analysis of real options

Valuing a highly leveraged firm

• How M&A transactions involving highly leveraged firms are different
• The effect of leverage on firm value
• The concept of the “whole deal” approach
• How to deal with leveraged recapitalisations

Case study: Analysing leverage in an M&A context

Liquidity and control   

• How much to pay for control, adjusting values for discounts and premiums
• How do liquidity discounts arise?
• How to assess the right level of premium for control
• The interaction of liquidity and control

Case study: Determining liquidity and control premiums in practice 

Acquisition strategies, using value creation as an assessment tool   

• Momentum acquisition strategies, the use and abuse of EPS as a performance measure
• Value creation versus momentum investing, why value creation is superior

Case study: Value creation analysis vs EPS analysis

The course director is a qualified chartered accountant who begun his career in Grant Thornton International and since 1986 worked in  Ernst & Young as a senior manager in the corporate advisory team, working on major acquisitions, disposals, IPOs and insolvency/restructuring transactions.
In 1989 he joined Threadneedle Asset Management as an analyst, becoming a fund manager specialising in income funds in 1991. In 1996 he joined Scottish Widows Investment Partnership as a director in the UK Equity team, again specialising in income funds. On becoming head of UK Equities in 1998, he introduced a new investment process incorporating cash flow based corporate valuation techniques. In 2000 he was appointed head of UK Equities when Scottish Widows was acquired by Lloyds Bank and he led the integration of the UK Equity teams.
 
In 2001 he joined HSBC Asset Management as European Head of Equity Research, managing a team of analysts in Paris and London tasked with developing a new research team and research process.In 2004 he was appointed Global Head of Equity Research, responsible for 60 global equity research analysts and 40 global credit analysts. He developed a global valuation and research process, training local analysts in Europe, the US and Asia in its use.
 
In 2006 he joined BG Consulting Group, a professional training company, as the head of investment banking and investment management managing a team of 12 trainers. His experience at BG included managing major graduate programmes for investment banking and investment management clients, training graduate to managing director level participants and advising clients on their training requirements for accountancy, corporate finance and valuation, investment management and private wealth training.
 
His clients have included HSBC, Morgan Stanley, Deutsche Bank, Citigroup, Allen & Overy, JP Morgan, Barclays Bank, Barclays Wealth, Morgan Stanley Investment Management and Schroders.

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