Methods of valuation for mergers and acquisitions ppt

Mergers and acquisitions are a used and respected alternative to a companys organic growth and they. Valuation methods posted on november 18, 2016 july 23, 2017 by john kennedy generally, when valuing a company, there are two different ways to approach the valuation of the company. This is the term use for consolidation of businesses or their assets. The methods of valuation related to mergers and acquisitions can be broadly categorized into three types, namely market based method, income based method, as well as asset based method.

Mergers and acquisitions powerpoint template slidemodel. If so, share your ppt presentation slides online with. Outline introduction pricing of merger takeover rules for valuation pricing estimators book value of the target firm liquidation value of the target firm replacement cost of the target firm current market value of the target firm trading multiples of peer firms transaction. In this chapter and the rest of the book, we focus on the mainstream valuation methods.

Where cash isnt an option, there are plenty of alternative methods of financing mergers and acquisitions, many of which will result in a speedy and lucrative transaction. An introduction to all valuation methods, using a range of mini casestudies to illustrate when and how to apply. Methods of business valuation process in india enterslice. In fact, some call it alchemy because valuation is often subjectivity masquerading as science and logic. Best methods of financing mergers and acquisitions ideals vdr. Evans, cpa, cma, cfm part 2 of this course continues with an overview of the merger and acquisition process, including the valuation process, post merger integration and antitakeover defenses. For example, where the company ceos, board of directors and cfos discuss the next step for the business. This chapter covers the principal reasons companies merge with or acquire one. In a merger demerger valuation, attempt is not to arrive at absolute values of the shares of the. While an ebitdabased valuation has similarities to a pe ratio valuation see above an ebitda multiple is not arrived at in the same way that a pe ratio would be which, as stated above, is directly related to the performance of quoted companies on a listed exchange and where a discount up to and over 50% is applied for private companies. Major us antitrust legislation includes the sherman antitrust act, the clayton act, the cellerkefauver act, and the hartscottrodino act.

Advise on cross border and domestic acquisitions and divestments assisting companies in acquisitions preliminary research and identifying. This course uses an analytical framework and realworld applications to introduce the key principles and techniques of successful mergers, acquisitions, divestitures and leveraged buyouts. Company valuation, merger and acquisition, discounted cash flow method. Several valuation methods are available, depending on a companys. Methods of financing mergers and acquisitions dummies. Valuation related to mergers and acquisitions economy watch. Price is the amount of money paid to obtain a good or service, and it may not necessarily reflect the value of that goods or service all the time.

The basic principle for valuing a business combination is similar to capital budgeting of projects. Valuation, leveraged buyouts, and financing is an approach towards understanding the musings of the world of mergers and acquisitions. A presentation on mergers and acquisitions authorstream presentation. A merger or acquisition can help a business expand, gather knowledge, move into a new market segment, or improve output. Mergers and acquisitions are parts of the natural cycle of business. Why do mergers that looked great on paper fail in reality. Valuation for mergers, buyouts and restructuring enrique r. Part i contains the main methods used in valuation of companies and their business units, part ii applies these methods to the valuation of mergers, acquisitions and leveraged buyouts and part iii deals. Valuation methods three main approaches to value a business. Outline introduction pricing of mergertakeover rules for valuation pricing estimators book value of the target firm liquidation value of the target firm replacement cost of the target firm current market value of the target firm trading multiples of peer firms. How does one value companies acquiring, or being acquired. Apply the means to the valuation variables for company b to get the estimated stock price for company b based on the comparable transactions.

Generally, when valuing a company, there are two different ways to approach the valuation of the company. She has held academic positions at thunderbird, school of global management in the u. Ppt mergers and acquisitions powerpoint presentation. Further, the information contained in this document is intended only to provide a perspective on valuation methods and the.

However, these opportunities come with expenses for both sides. Fim ppt mergers and acquisitions valuation finance. Arzac 7 overview of the book this book is organized in three parts. This approach is based on the concept of a company as the going concern. The valuation of mergers and acquisitions part 1 acca. The valuation of mergers and acquisitions part 1 free acca lectures for the advanced financial management afm exam. The mergers and acquisitions powerpoint template is an important business presentation concept. Standard merger deals typically involve administrators, lawyers, and investment bankers even before the total acquisition cost is considered.

Methods of payment includes cash payment, security payment and leveraged buyout. Strategic fit in mergers and acquisitions an imperative. To financially evaluate a merger or acquisition, the acquirer company should first determine whether the asking price is reasonable. Need for valuing shares or businessas far as unlisted companies are concerned the price of shares of such company is notreadily available, so we need to determine the value of shares of such companies, but this isnot the case with the. The workshops are suitable for delegates from quoted companies, companies that are. The best method will depend on the companies in question, their share situation, debt liabilities, and the total value of their assets. Do mergers and acquisitions create shareholder value. In order to have a holistic approach on valuation and to surmount over valuation related matters, it is extremely essential that a professional needs to. The purpose of this course is to give the user a solid understanding of how mergers and. Valuation methods in mergers and acquisitions initially, it is necessary to distinguish the terms value and price. Difference between market extension merger and product extension merger the difference between market extension merger and product extension merger lies in the fact that the later is meant to add to the existing variety of products and services offered by the.

Several valuation methods are available, depending on a companys industry, its characteristics for example, whether it is a startup or a mature company, and the analysts preference and expertise. Mergers and acquisitions m is the property of its rightful owner. All these methods carry a significant degree of importance in the context of mergers and acquisitions. The approach might be different in light of specific issues that are in nature different in context and character. If the present value of incremental cash flows from the merger exceeds the present value of the amounts paid, than the investment should add value. Valuation of firms in mergers and acquisitions valuation of firms in mergers and acquisitions okan bayrak definitions a.