Niket K Pingle

MFM 17

Mergers and Acquisitions

y Introduction y Defining M&A y Advantages of M&A y Valuation Matters y Doing The Deal y Break Ups y Why They Can Fail y Conclusion y Source of Information: http://www.investopedia.com/university/mergers/

Introduction
y Mergers and acquisitions (M&A) and corporate restructuring are a big part of the orporate finance world y Once you know the different ways in which these deals are executed, you'll have a better idea of whether you should cheer or weep when a company you own buys another company - or is bought by one. y You will also be aware of the tax consequences for companies and for investors

Defining M&A
y One plus one makes three y The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. y Two companies together are more valuable than two separate companies. y Strong companies will act to buy other companies to create a more competitive, cost-efficient company. y The companies will come together hoping to gain a greater market share or to achieve greater efficiency. Because of these potential benefits, target companies will often agree to be purchased when they know they cannot survive alone.

Advantages of M&A
y Staff reductions y Economies of scale y Acquiring new technology y Improved market reach and industry visibility

Varieties of Mergers
y Horizontal merger

y Vertical merger

y Conglomeration

Valuation Matters
y Various methods and tools to assess a target company

1. Comparative Ratios y Price-Earnings Ratio (P/E Ratio) y Enterprise-Value-to-Sales Ratio (EV/Sales) 2 . Replacement Cost 3. Discounted Cash Flow (DCF)

Break Ups
y Regional Trade Agreement y Avenues available to a firm to raise equity and long term debts in International Markets y Why Euro is stronger than Dollar? y Will India be super power by 2050? y IMF and WORLD BANK y G-20 The London summit y Trade Barriers y Global human resource division -Intercultural Management

Conclusion
y Regional Trade Agreement y Avenues available to a firm to raise equity and long term debts in International Markets y Why Euro is stronger than Dollar? y Will India be super power by 2050? y IMF and WORLD BANK y G-20 The London summit y Trade Barriers y Global human resource division -Intercultural Management