why would you buy another company? - ANSWER because you think you'll be better off after buying the item
"shortcut" to higher financial performance for a company
acquirer might want to purchase another company (target) if the target's asking price is less than implied value
2 points to ...
why would you buy another company? - ANSWER because you think you'll be better off after buying
the item
"shortcut" to higher financial performance for a company
acquirer might want to purchase another company (target) if the target's asking price is less than
implied value
2 points to become inclined to purchase a target company - ANSWER 1. asking price is less than its
implied value (PV of future cash flows)
2. IRR > WACC and deal must be neutral or accretive to the EPS
What type of deals to companies pursue? - ANSWER ones that are accretive to EPS - transactions
increasing the EPS
Financial Reasons for acquisitions - ANSWER 1. consolidation / economies of Scale
2. geographic expansion
3. gain market share
4. seller is undervalued
5. acquiring customers / distribution channels
, 6. tax reductions - invert by acquiring seller in low-tax jurisdiction then claim it is "headquartered"
there
7. product expansion/diversification
Step 1 in advisory for selling a company - ANSWER 1. Plan the process and create marketing
materials
-meet with management team of company and learn abt it, teaser that summarizes the company
and reasons to acquire + CIM that goes more in depth, also think abt buyers and timing for
contacting them
step 2 in advisory for selling a company - ANSWER 2. contact initial set of buyers
-pitching the company, sending out the teaser. if interested, negotiate an NDA and send CIM,
respond to questions from interested buyers
step 3 in advisory for selling a company - ANSWER 3. set up management meetings and
presentations
- set up meeting between buyer and seller and present
step 4 in advisory for selling a company - ANSWER 4. solicit initial and subsequent bids from buyers
- after presenting to all interested buyers, set a deadline for indications of interest (IOIs)
buyers submit term sheet outlining proposed purchase price, and form of consideration
bidding ensues, and winner is picked
step 5 in advisory for selling a company - ANSWER 5. conduct final negotiations, arrange financing,
close the deal
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