Valuation for M&A

Aligning Due Diligence to Deal Purpose

  • The primary motivation of any deal is to create shareholder value
  • The focus of due diligence then should be on assessing risks relating to value and value creation

Value and Value Creation

  • Many forms of value; concerned with transaction price and reservation prices
  • Difference between transaction price and reservation price is value created
  • Value creation enhanced when synergies exist

Synergies

  • Three types: 1) Cost reduction and efficiency leverage, 2) Revenue and market growth, and 3) Capital optimization
  • Must account for costs of achieving


Slide titles:


Valuation for M&A
Valuation for M&A
Table of Contents
Table of Contents
Learning Objectives
Learning Objectives
Table of Contents
Table of Contents
The 50,000 Foot View
The 50,000 Foot View
Valuation Model Lifecycle
Valuation Model Lifecycle
Due Diligence
Due Diligence
Table of Contents
Table of Contents
What is Value?
What is Value?
Enterprise Value
Enterprise Value
Table of Contents
Table of Contents
The Three Paths to Creating Value
The Three Paths to Creating Value
Market Evidence
Market Evidence
M&A Transaction and Reservation Prices
M&A Transaction and Reservation Prices
Value Creation Through M&A
Value Creation Through M&A
Case Study #1
Case Study #1
Case Study #1 Answer
Case Study #1 Answer
Case Study #2
Case Study #2
Case Study #2 Answer
Case Study #2 Answer
Table of Contents
Table of Contents
Methods of Estimating Fair Market Value
Methods of Estimating Fair Market Value
Cost Approach
Cost Approach
Operating Assets of the Firm
Operating Assets of the Firm
Income Approach
Income Approach
Market Approach
Market Approach
Concluding a Fair Market Value
Concluding a Fair Market Value
Identifying Key Value Drivers
Identifying Key Value Drivers
Table of Contents
Table of Contents
Defining Synergy
Defining Synergy
Synergistic Control Value
Synergistic Control Value
Cost Reduction and Efficiency Leverage
Cost Reduction and Efficiency Leverage
Revenue and Market Growth
Revenue and Market Growth
Capital Optimization
Capital Optimization
Case Study #3
Case Study #3
Case Study #3 Answer
Case Study #3 Answer
Table of Contents
Table of Contents
Buyer Types
Buyer Types
Transaction Structures
Transaction Structures
Transaction Financing and Risk
Transaction Financing and Risk
Table of Contents
Table of Contents
The Valuation Professional’s Role
The Valuation Professional’s Role
The Non-Valuation Professional
The Non-Valuation Professional
Table of Contents
Table of Contents
Assembling All the Pieces
Assembling All the Pieces
Contact Information
Contact Information
Valuescope
Valuescope