Financial Modeling for Acquisitions in Excel

Objective
The Financial Modeling for Acquisitions in Excel training course will provide participants with the ability to create and understand different types of acquisition models. Through building models in a hands-on environment, you will be better able to value the benefits and costs of different types of merger and acquisition transactions; to quantify the risks to lenders and equity investors in a transaction; and to create efficient and transparent analyses.
 

Key benefits

• Understand the objectives and the structure of different types of acquisition models
• Work through accounting and financing issues in acquisition models and development of pro-forma balance sheets
• Create an acquisition model that includes various modeling complexities and evaluates the effect of different acquisition structures on different measures of financial performance from the perspective of lenders and equity investors
• Compute the value of acquisitions and synergies using different techniques, including alternative discounted cash flow, returns earned in acquisitions, accretion versus dilution and the net present value of synergies relative to premiums
• Quantify risks inherent in acquisitions and understand mistakes in risk assessment made in the financial crisis
• Learn Excel techniques to make better presentations from models and to make models more transparent and efficient

Day 1
Part I –  Introduction

• A review of acquisition terminology, acquisition accounting, financial objectives and basic  model structure

Exercises and Discussion using Case Study

• Valuation and modeling mistakes in acquisitions analysis
• Typical acquisition analysis – DCF model, multiples, IRR analysis and accretion
  and dilution analysis
• Acquisition terms and modeling of consideration, premium and break-even synergies
• Accretion and dilution analysis with stock transaction
• DCF model – problems and manipulation, flexible modeling and WACC problems
• Derivation of P/E and EV/EBITDA multiples from growth rates, cost of capital and returns
• IRR analysis and LBO simulation

Part II  –  Acquisition Exercises

Participants will complete a series of case exercises that represent components of an acquisition model. The exercises include setting up a model to evaluate alternative holding periods, developing a pro-forma balance sheet, modeling of different debt issues, cash flow sweeps, a cash flow waterfall, debt defaults and Monte Carlo simulation.

Exercises

• Structure of LBO model and discussion of complexities
• Timing issues and periodic modeling 
• Development of pro-Forma balance sheet using alternative transaction structures
• Debt analysis with amortizing, bullet and capitalizing debt

Day 2
Part II – Acquisition Exercises continued

• Analysis of risk and return for alternative debt instruments using sensitivity, break-even and scenario analysis
• Computation of probability of default and required credit spread using Monte Carlo simulation
• Cash flow sweep, covenants and working capital facilities 
• Depreciation complications in modeling
• Income tax complications in modeling
• Management incentives and IRR sharing

Day 3
Part III – Accretion Analysis and Valuation Modeling in Acquisitions

This part addresses valuation and risk analysis issues that arise in acquisition analyses. Rather than examining basic valuation issues, this component of the course covers problems that arise in valuation relating to stock options, high cost debt, income taxes and other items. Measurement and valuation of synergies will also be covered.

Exercises

• Detailed analysis of EV/EBITDA ratio for evaluating entry and exit multiples with alternative varying growth rates, changing risk premium, and differing returns versus the cost of capital
• Valuation of synergies 
• Construction of integrated financial model with pro-forma balance sheet and combined financing
• Detailed DCF valuation issues – Terminal capital expenditures and depreciation, stable deferred taxes, stable working capital
• DCF Valuation adjustments – Debt valuation, stock options, fair value of derivatives
• Construction of accretion and dilution analysis and evaluation of credit rating after acquisition

The Financial Modeling for Acquisitions in Excel training course is recommended for financial professionals involved in analysis of mergers and acquisitions who are interested in creating acquisition models or who simply would like to understand how to interpret models created by others. An academic or equivalent background, and/or relevant professional experience is required.

Prerequisite
The Financial Modeling for Acquisitions in Excel training course is a hands-on course that will be conducted using numerous exercises in Excel. All participants are required to have a solid, basic knowledge of Excel prior to attendance. For participants who do not regularly use Excel in their day to day work, AIF is offering an optional Excel session, at no extra cost to the participant.

Optional Excel Session 
The objective of this session is to assure that all participants, including people who do not routinely work with Excel, become familiar with the tools in Excel and work comfortably on the class exercises.  The optional Excel session will cover short-cut keys, effective presentations, use of forms, one-way and two-way data tables, and look-up functions for scenario analysis.

This optional session will take place at AIF on the evening prior to the first day of the program, from 5.30 - 8.30pm.

Amsterdam Institute of Finance is registered with CFA Institute as an Approved Provider of continuing education programs. This program is eligible for 18 CE credit hours as granted by CFA Institute. If you are a CFA Institute member, CE credit for your attendance at this event will be automatically recorded in your CE Diary.

“Very practical and useful”
Analyst / Non-Executive Board Member
Intrinsic Value Investors
United Kingdom

“Lots of information and useful pointers.”
Corporate Business Development Analyst
Irdeto
The Netherlands