Package 5: Merger Modeling Topics

Our merger modeling topics introduce critical skills required for understanding how to structure and analyze mergers & acquisitions. After modeling a company's profits / cash flow and valuing the entity, one must decide what to do with the company in the grand scheme of its strategic alternatives, including a merger or acquisition. We introduce the basics of deal structuring and implications on accretion/dilution to building more involved merger models with the complexity of complicated FASB and IFRS accounting rules.


Last 10 posts

"Share Repurchases" video online at under FREE EXHIBITS
Hi In the last Q&A you refer to the free "Share Repurchases" video online at under FREE EXHIBITS to have a better understanding of the opportunity cost of funding Capital structure components. I can`t find the video. Could you please help? Thank you
Go to post added 7 years ago
Marginal Interest Rate (A/D Analysis example)
Where specifically do you get the Marginal Interest Rate (is it savings rate, or treasury?) from, especially in the current low interest rate environment?
Go to post added 8 years ago
NOL cap (due to M&A) affects "ALL FUTURE" NOLs?
In the tax schedule excel worksheet, NOL Used to Shelter Income (cell g13) formula takes the NOL cap per year if there is a change of control forward forever. So it appears that this “cap” affects all future (ending NOL) balances (and not just the acquired/historical target NOL portion)? Also i... Read More
Go to post added 10 years ago
Merger Modeling Basics: about the goodwill amortization
Hi, if there is no goodwill amortization, but under certain circumstances, the deal can be considered as asset deal , or can be applied the normal asset depreciation, even there is no amortization on goodwill in this case, I think you still have to incorporate the depreciation into the model, becaus... Read More
Go to post added 10 years ago
GAAP requirement to recognize all known liabilities
In the M&A module, when illustrating the different effective tax rates in the Pre-/Post-142/338 election scenarios, it is stated that GAAP requires all companies to recognize all known liabilities as soon as possible, hence why under a 338 election, the reported GAAP effective tax rate is lower ... Read More
Go to post added 10 years ago
Tax implications on Cash vs Stock deal
Do Stock deals enjoy a distinct financial advantage over cash deals due to U.S. tax policy (since stock-for-stock deals are not considered taxable events)? If so, what are the tax implications of stock vs. cash (besides the fact that cash clearly has forgone interest income or the interest expense f... Read More
Go to post added 10 years ago
Quick SGA question from basic accretion/dilution model
Hi, Some time ago I posted this question in the basic accretion dilution model. [quote:1sxzkh33]Hi, This might be a dumb question: Why are we using the 2005E for EPS, PE, and net income but SGA from 2004A? Posted: 10/8/2008 9:13:27 PM ========== Not a dumb question! You are calculating acc... Read More
Go to post added 10 years ago
Questions on basic Accretion/Dilution model
1. Goodwill: since GW is not amortised whatever the case I was a little confused that you use the terminology of GW amortisation. The US 338 election may allow a tax credit amortisation but I remain confused here slightly. If there is no GW amortisation allowed anywhere in the world then you should ... Read More
Go to post added 10 years ago
Implied P/E of debt
Can you further explain implied P/E of debt for the Acquiror? I have read this response and have watched the video but need further explanation than “Don't forget, multiples (5x) are inverses of percentages (20%) and that's mathmatical in nature. $100 x 5x is the same as $100 / 20%.” I don’t ... Read More
Go to post added 10 years ago
AD analysis left-field questions
I had a few side/random questions from the accretion dilution analysis. Finance ONLY purchase price equity (& NOT EV), as quick/dirty model/anal? In other words, I would think that financing would FUND EV (if there is debt, that debt would most likely be refinanced/ repaid/retired, or less co... Read More
Go to post added 10 years ago