The Acquisition Finance program introduces participants to the intersection of theory and practice in mergers and acquisitions (M&A) from a finance point of view. The three-day program provides the necessary quantitative tools to understand and apply the financial side of preparing the deal. It will cover both public and private deals involving large corporations and SMEs as market participants. The program emphasizes the importance of deal structure, managerial conduct, and the ability to estimate a deal’s success.
Typical topics include valuation models, such as DCF and ratio analysis, capital structure, and financing choices, designed specifically for evaluating M&A transactions, corporate restructurings, or levered buyout opportunities. To this end, the program will cover the issue of debt capacity and the benefits and complexities involved with highly levered transactions, implications of various deal terms, such as those related to the form of the transaction and the form of payment. Emphasis here is placed on risk-mitigation and establishing the parameters for win-win deals.
The program will also provide the participants with an overview of the empirical evidence on M&A transactions from both a practitioner’s point of view and as it has emerged over the last three decades in the academic corporate finance literature. Time permitting, peripheral topics, such as takeover defense mechanisms, the role of shareholder activism in M&A, and special considerations involved with cross-border transactions may be included.
The program will provide the participants with a finance-based theoretical framework and its practical implications surrounding the issue of M&A. Participants will work on a number of short quantitative and analytical group exercises and case studies that cover both European and US scenarios, further illustrating the materials discussed.
The program is often technical and quantitative in nature and assumes a base-level knowledge of valuation methods in finance, including the concept of cash flows, cost of capital, asset valuation, and tradeoff models between risk and return, such as the CAPM and empirical factor-models. Experience in corporate finance, capital markets, or investment management is recommended but not required.
How you will benefit
- Understand the importance of defining success in M&A and the role of valuation models
- Explore several cash flow and balance sheet models for valuing and structuring a deal
- Understand the tradeoffs between forms of payment and equity and debt financing
- Recognize and exploit unused debt capacity
- Understand the major differences and challenges between public and private deals
- Understand the role of liquidity discounts and control premia
- Examine the types of debt and equity best suited to the acquirer’s and target’s objectives
- Strengthen bargaining and deal design in acquisition finance and merger advisory work
- Understand the role of collars, toeholds, earn-outs and termination fees for risk mitigation
- Gain the expertise to enter the financing process with confidence and skill
Goals and objectives
This program presents an introduction to the current quantitative tools and concepts in finance related to evaluating M&A, corporate restructurings, and highly leveraged transactions. We consider valuation and the choice between debt, equity or other securities, how to fully exploit the debt capacity of the firm, and what types of financing best suit both buyer and seller objectives. These perspectives are combined with an emphasis on the creation of value for equity holders, mezzanine investors and bankers.
The program begins with an overview of valuation methods relevant to acquisition finance and a discussion of how leverage can create or destroy value. The program then proceeds with lectures and case discussions to present a framework for the analysis of highly leveraged transactions. Particular attention is given to capital structure considerations. During the second and third day of the program, several important topics in M&A are discussed, such as risk mitigation in M&A deals, the link between theory and the empirical evidence on M&A, and other practical considerations in M&A deal design. Participants will also benefit from guest speaker presentations on the anatomy of an actual M&A case connecting the theoretical concepts to real-world scenarios.
The specific aims of the program are to:
- Provide a quantitative framework for critically evaluating M&A from a finance perspective. It will survey the tools and analytics that could be employed in assessing the deal terms and the (hidden) alternative terms. The emphasis is on practical means of developing a “view” about these proposals.
- Help understand the impact of leverage on a deal and assess associated challenges in valuation and risk analysis. Key goals are to understand possible opportunities for transaction design, to think critically about the specifics of financing, and to anticipate the implications of deal design for success, measured both in completion of the deal and its long-term value.
- Understand bargaining and deal design in acquisition finance and merger advisory work.
The program emphasizes the range of choices confronting the deal designer and the need to make sensible trade-offs in arriving at a successful agreement benefitting both parties (win-win deals).
Program length
3 days
| Day 1 | 09:00 – 17:30 |
| Day 2 | 09:00 – 17:30 |
| Day 3 | 09:00 – 17:30 |
Next step
We offer carefully crafted learning paths designed to help you dive deeper into various facets of finance. Take the next step in your professional learning path by choosing one or more of our specialized programs, for example:
Introduction to Acquisition Finance: Overview of the program
- Define a successful M&A?
- Underlying forces
- Importance of deal structure
The acquisition process: An introduction to deal design
- Framework: Structure – Conduct – Outcomes
M&A Valuation
- Valuation methods: Discounted cash flows (DCF)
- DCF, multiples, or alternative methods?
- Discount rates, cost of capital, and risk
- Valuing synergies
- Private company valuation
- Valuing liquidity and control
Capital structure theory: A quick review
- The impacts of debt
- MM I & MM II
- Corporate taxes and tax shield assumptions
- Levering and unlevering betas
- Debt capacity
Terms of the deal
- Determinants of form of the transaction
- Methods of transferring ownership and control
- Form of payment and financing
- Exchange ratios
- Win-win deals
- Risk management
- Caps, floors, collars
- Toeholds puzzle, termination fees, and lockups
Empirical evidence on M&A
- Event study method: pros and cons
- US evidence
- European evidence
Highly levered transactions
- Adjusted present value technique
Examples of additional topics (time permitting)
- The role of social issues in M&A
- The role of shareholder activism in M&A
- Takeover defense mechanisms and anti-trust legislation
- Cross-border acquisitions
Program preparation
There is some preparatory work required for this program. Pre-readings consist of case materials, chapters of a book and/or a few articles. These materials will be made available on a password protected webpage a few weeks prior to the program.
To ensure maximum benefit from the program for participant and fellow-participants, we strongly advise to prepare prior to attending.
Read more
> Prof. Schlingemann: ‘Remember: an accurate valuation is not the same as a fair price’
Acquisition Finance is an introductory program designed for professionals with a desire to learn more about the finance perspective on M&A, corporate restructurings, and highly levered transactions, such as buyouts or recapitalizations. The program is beneficial for those serving in various roles in and around the organization. For example, senior executives would benefit if they want to be introduced to or better understand the role of M&A in achieving strategic growth considerations. Mid-level managers would benefit if they seek to enhance their involvement in and understanding of the various finance and investment functions in the organization. Finally, the program would be beneficial for anyone in peripheral or external roles that involve financial and legal advising as it relates to M&A strategies.
This program can be taken as a follow-up to AIF’s Mergers and Acquisitions program, which provides more of a birds-eye view on the topic and offers less emphasis on the financial and quantitative aspects of M&A, or as a stand-alone program. Experience in corporate finance (including acquisition finance), capital markets, or investment management is helpful, but not required. However, it is important to note that the program is often technical and quantitative in nature and assumes a base-level knowledge of valuation methods in finance, including the concept of cash flows, cost of capital, asset valuation, and tradeoff models between risk and return, such as the CAPM and empirical factor-models.
Is this program not the right fit for you?
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