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Merger and accquisition

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Merger and accquisition

  1. 1. MERGERS AND ACCQUISITION
  2. 2. SYNERGY2+2=5
  3. 3. 1. ECONOMIES OF SCALE2. EFFECIENCY IMPROVEMENT3. MARKET SHARE4. CASH RICHNESS5. COMPLEMENTARY RESOURCES6. TAX EFFECTS7. UNDER VALUED ASSETS
  4. 4. 1. DIVERSIFICATION2. UNDER VALUED SHARES3. EARNINGS GROWTH
  5. 5. TYPES OF MERGERS1. Horizontal merger2. Vertical merger3. Market-extension merger4. Product-extension merger5. Conglomeration6. Reverse merger
  6. 6. 1. Asset valuation2. Historical earnings valuation,3. Future maintainable earnings valuation,4. Relative valuation (comparable company & comparable transactions),5. Discounted cash flow (DCF) valuation
  7. 7. 1. Cash2. Finance3. Hybrid
  8. 8. 1. If payment in cash Cost = Amount paid – Value of target company3. If payment in shares Cost = Post merger market value of shares allotted – Value of the target company
  9. 9. For the target company (a) If payment in cash Gains = Cash received – Market value of target company (b) If payment in shares Gains = Post merger market value of shares allotted – Market value of the target company
  10. 10. For the acquirer company = BENEFIT – COSTWhere Benefit = VAB – VA – VBTherefore, GAIN = VAB – VA – Amt paid
  11. 11. Before the bid2. Staggered board3. Super majority clause4. Poison pills5. Dual class capitalization6. Global parachute7. Vigil on bid prospects
  12. 12. Post offer defenses2. Greenmail3. Pacman defense4. Litigation5. Asset restructuring6. White knight7. Reverse bid

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