LBO & Merger Modelling
28-30 September 2010 London, The City
This practical computer based 3 day course is designed to provide you with an in-depth understanding of LBO and merger modelling methods in order to make effective business decisions based on sound valuation of businesses.
You will have a chance to learn about the core concepts of the LBO and merger modelling, establishing the financing and structuring of a deal, modelling various types of acquisitions and disposals as well as assessing the debt capacity of a company.
You will gain the tools to value and account for a merger of two businesses and explore the concept of synergy valuation.
By the end of the training you will be able to:
- Understand the core concepts of LBO modelling and why transactions work and fail
- Determine the purchase price
- Establish the financing and structuring of a deal
- Be able to build an LBO model including the sources of funds statement and debt waterfall schedules
- Assess the debt capacity of a company
- Be able to analyse the various capital structures available in an LBO deal and their impact on return
- Model various types of acquisitions and disposals
- Generate an accretion/dilution analysis
- Using cash and the P/E of cash analysis
- Explore the accretion/dilution ratio vs. wealth generation
Prerequisites: To attend this course, participants should have an intermediate knowledge of accounting, a good working knowledge of financial modelling and Excel and a good understanding of traditional valuation methodologies.
You can book separately one day of LBO Modelling and day 2 & 3 of Merger Modelling. Check our Pricing and Location section for details.
Delegates are expected to bring a laptop with Excel. If necessary we can provide one for an additional fee.
Main Topics Covered During This Training
- LBO analysis and the key drivers in an LBO valuation
- Differences between DCF and LBO analysis
- Modelling the LBO in practice
- Assessing debt capacity
- Structuring the debt package
- Why transactions work and fail
- The different types of transactions and how they are accounted for
- Modelling various types of acquisitions and disposals
- Determining the purchase price
- Synergy analysis
- Generating an accretion/dilution analysis
- Using cash and the P/E of cash
- Accretion/dilution vs. wealth generation
- Financing and structuring the deal
Who Should Attend
Participants requiring an understanding of LBO and combination valuation techniques and how 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
Teaching Method
This is a highly practical course with many real life case studies and exercises. Tutor will be focused on teaching practical strategies that can be taken back to your business and put into immediate effect.
In order to help us establish your individual and business concerns, you will be asked to fill pre-course questionnaire.
Because of the nature of the course the number of places is limited and will be filled on first come, first accepted basis. We advise to book in advance in order to avoid disappointment.
Delegates are expected to bring a laptop with Microsoft Excel version 2003 or later. If necessary, we can provide one for an additional fee of £180 + VAT for all 3 days.
LBO & Merger Modelling - Combination Valuation - 3 day course
You can book separately 1 day of LBO Modelling or day 2 & 3 Merger Modelling
Day 1: LBO Modelling - Hybrid Valuation
Leveraged buyout analysis
- Basic principles of LBOs
- Introduction to players and financing instruments
- Drawing the distinction between DCF and LBO analysis
- The key drivers in an LBO valuation
- Free cash flow for debt paydown
- Assessing IRRs
Exercise: Summary analysis, participants produce an LBO valuation from a forecast cash flow
Modelling the LBO
- Sources & uses
- Simple income statement and cash flow forecasting
- Management case
- Bank base case
- Payout case
- Debt modelling
- Rates, ratios, covenants
- Payback: amortisation vs. cash sweep
- Exit and returns analysis
Case study: Participants build a basic LBO analysis from scratch
Assessing debt capacity
- The key ratios used in analysing debt capacity
- How to improve the debt capacity for a business
- Bank priorities and the way in which debt is priced and managed
Case study: Participants assess the debt capacity for a company
Structuring the debt package
- How is the debt package structured?
- Senior debt tranching
- Second lien debt
- Subordinated debt
- Payment in kind (“PIK”)
Case study: Participants add further features into the LBO model, including different debt payment schedules and PIK instruments
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Day 2 & 3: Merger Modelling
Corporate transaction theory
- Transaction theory and rationale
- Why transactions work
- Why transactions fail
Modelling a transaction
- The different types of transaction and how they are accounted for
- Consolidation accounting under the current IFRS 3 and IAS 27 and the new approach that will be taken by the revised IFRS 3, IAS 27 and IAS 28
- Change of control triggers
- Accounting for controlling interests (“NCI”)
- Accounting for disposals
- Partial disposals – creating a NCI
- Partial disposal – loss of control
Case study: Participants model various types of acquisitions and disposals
Determining the purchase price
- How much can an acquirer pay?
- Market-based analysis – comparable transactions and control premium
- Synergy analysis
Case study: Participants calculate the purchase price for a company and cross-check against comparative transactions and control premiums
Transaction analysis
- Generating an accretion/dilution analysis
- Using cash and the P/E of cash
Case study: Bringing it all together, case study analysing a static merger with accretion and dilution analysis
Wealth generation and ratio analysis
- Accretion/dilution vs. wealth generation
- Financing and structuring the deal
Case study: Bringing it all together, case study modelling a merger with a transaction analysis
The latest trends in the M&A market
Mike Corless
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.
28-30 September 2010 London - A 3 Day Training
Early Bird before 31 August and pay £1850 + 17.5% VAT
After that date - £1995 + VAT
You can book separately:
* LBO Modelling (1 day) - £795 + VAT
* Merger Modelling (2 days) - £1495 + VAT
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DISCOUNTS
- 2 people - 5% discount (only if you book for all 3 days), 3 people - 10% discount . Delegates have to be from the same company and book at the same time
- If you book for 2 (full time 2-3 day) courses at the same time you will receive 10% of the value of the cheaper one.
IN-HOUSE TRAINING
If you have a team of 4 or more this course can be customised and organised in-house at your convenience. Contact one of our advisors to find out more.
Call us now on +44 (0) 207 193 5035
