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| Instructor and Student Resources | |
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| About the Authors | |
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| Foreword | |
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| Acknowledgments | |
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| Introduction | |
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| Structure of the Book | |
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| Valuation (Chapters 1-3) | |
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| Leveraged Buyouts (Chapters 4 He 5) | |
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| Mergers & Acquisitions (Chapters 6 & 7) | |
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| ValueCo Summary Financial Information | |
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| Valuation | |
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| Comparable Companies Analysis | |
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| Summary of Comparable Companies Analysis Steps | |
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| Select The Universe of Comparable Companies | |
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| Study the Target | |
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| Identify Key Characteristics of the Target for Comparison Purposes | |
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| Screen for Comparable Companies | |
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| Locate The Necessary Financial Information | |
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| SEC Filings: 10-K, 10-Q, 8-K, and Proxy Statements | |
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| Equity Research | |
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| Press Releases and News Runs | |
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| Financial Information Services | |
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| Summary of Financial Data Primary Sources | |
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| Spread Key Statistics, Ratios, and Trading Multiples | |
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| Calculation of Key Financial Statistics and Ratios | |
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| Supplemental Financial Concepts and Calculations | |
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| Calculation of Key Trading Multiples | |
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| Benchmark the Comparable Companies | |
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| Benchmark the Financial Statistics and Ratios | |
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| Benchmark the Trading Multiples | |
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| Determine Valuation | |
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| Valuation Implied by EV/EBITDA | |
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| Valuation Implied by P/E | |
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| Key Pros and Cons | |
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| Illustrative Comparable Companies Analysis for ValueCo | |
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| Select the Universe of Comparable Companies | |
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| Locate the Necessary Financial Information | |
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| Spread Key Statistics, Ratios, and Trading Multiples | |
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| Benchmark the Comparable Companies | |
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| Determine Valuation | |
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| Questions | |
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| Bloomberg Appendix | |
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| Precedent Transactions Analysis | |
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| Summary of Precedent Transactions Analysis Steps | |
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| Select the Universe of Comparable Acquisitions | |
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| Screen for Comparable Acquisitions | |
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| Examine Other Considerations | |
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| Locate the Necessary Deal-Related and Financial Information | |
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| Public Targets | |
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| Private Targets | |
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| Summary of Primary SEC Filings in M&A Transactions | |
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| Spread Key Statistics, Ratios, and Transaction Multiples | |
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| Calculation of Key Financial Statistics and Ratios | |
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| Calculation of Key Transaction Multiples | |
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| Benchmark the Comparable Acquisitions | |
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| Determine Valuation | |
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| Key Pros And Cons | |
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| Illustrative Precedent Transaction Analysis for ValueCo | |
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| Select the Universe of Comparable Acquisitions | |
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| Locate the Necessary Deal-Related and Financial Information | |
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| Spread Key Statistics, Ratios, and Transaction Multiples | |
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| Benchmark the Comparable Acquisitions | |
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| Determine Valuation | |
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| Questions | |
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| Bloomberg Appendix | |
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| Discounted Cash Row Analysis | |
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| Summary of Discounted Cash Flow Analysis Steps | |
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| Study the Target and Determine Key Performance Drivers | |
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| Study the Target | |
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| Determine Key Performance Drivers | |
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| Project Free Cash Flow | |
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| Considerations for Projecting Free Cash Flow | |
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| Projection of Sales, EBITDA, and EBIT | |
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| Projection of Free Cash Flow | |
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| Calculate Weighted Average Cost of Capital | |
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| Determine Target Capital Structure | |
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| Estimate Cost of Debt (r<sub>d</sub>) | |
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| Estimate Cost of Equity (r<sub>e</sub>) | |
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| Calculate WACC | |
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| Determine Terminal Value | |
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| Exit Multiple Method | |
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| Perpetuity Growth Method | |
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| Calculate Present Value and Determine Valuation | |
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| Calculate Present Value | |
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| Determine Valuation | |
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| Perform Sensitivity Analysis | |
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| Key Pros and Cons | |
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| Illustrative Discounted Cash Flow Analysis for ValueCo | |
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| Study the Target and Determine Key Performance Drivers | |
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| Project Free Cash Flow | |
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| Calculate Weighted Average Cost of Capital | |
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| Determine Terminal Value | |
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| Calculate Present Value and Determine Valuation | |
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| Questions | |
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| Bloomberg Appendix | |
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| Leveraged Buyouts | |
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| Leveraged Buyouts | |
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| Key Participants | |
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| Financial Sponsors | |
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| Investment Banks | |
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| Bank and Institutional Lenders | |
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| Bond Investors | |
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| Target Management | |
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| Characteristics of a Strong LBO Candidate | |
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| Strong Cash Flow Generation | |
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| Leading and Defensible Market Positions | |
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| Growth Opportunities | |
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| Efficiency Enhancement Opportunities | |
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| Low Capex Requirements | |
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| Strong Asset Base | |
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| Proven Management Team | |
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| Economics of LBOs | |
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| Returns Analysis-Internal Rate of Return | |
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| Returns Analysis-Cash Return | |
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| How LBOs Generate Returns | |
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| How Leverage Is Used to Enhance Returns | |
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| Primary Exit/Monetization Strategies | |
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| Sale of Business | |
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| Initial Public Offering | |
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| Dividend Recapitalization | |
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| Below Par Debt Repurchase | |
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| LBO Financing: Structure | |
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| LBO Financing: Primary Sources | |
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| Bank Debt | |
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| High Yield Bonds | |
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| Mezzanine Debt | |
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| Equity Contribution | |
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| LBO Financing: Selected Key Terms | |
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| Security | |
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| Seniority | |
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| Maturity | |
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| Coupon | |
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| Call Protection | |
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| Covenants | |
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| Term Sheets | |
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| LBO Financing: Determining Financing Structure | |
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| Questions | |
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| Bloomberg Appendix | |
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| LBO Analysis | |
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| Financing Structure | |
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| Valuation | |
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| Locate and Analyze the Necessary Information | |
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| Build the Pre-LBO Model | |
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| Build Historical and Projected Income Statement through EBLT | |
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| Input Opening Balance Sheet and Project Balance Sheet Items | |
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| Build Cash Flow Statement through Investing Activities | |
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| Input Transaction Structure | |
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| Enter Purchase Price Assumptions | |
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| Enter Financing Structure into Sources and Uses | |
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| Link Sources and Uses to Balance Sheet Adjustments Columns | |
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| Complete the Post-LBO Model | |
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| Build Debt Schedule | |
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| Complete Pro Forma Income Statement from EBLT to Net Income | |
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| Complete Pro Forma Balance Sheet | |
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| Complete Pro Forma Cash Flow Statement | |
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| Perform LBO Analysis | |
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| Analyze Financing Structure | |
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| Perform Returns Analysis | |
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| Determine Valuation | |
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| Create Transaction Summary Page | |
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| Illustrative LBO Analysis for ValueCo | |
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| Questions | |
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| Bloomberg Appendix | |
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| Mergers & Acquisitions | |
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| Sell-Sine M&A | |
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| Auctions | |
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| Auction Structure | |
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| Organization and Preparation | |
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| Identify Seller Objectives and Determine Appropriate Sale Process | |
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| Perform Sell-Side Advisor Due Diligence and Preliminary Valuation Analysis | |
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| Select Buyer Universe | |
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| Prepare Marketing Materials | |
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| Prepare Confidentiality Agreement | |
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| First Round | |
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| Contact Prospective Buyers | |
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| Negotiate and Execute Confidentiality Agreement with Interested Parties | |
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| Distribute Confidential Information Memorandum and Initial Bid Procedures Letter | |
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| Prepare Management Presentation | |
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| Set up Data Room | |
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| Prepare Stapled Financing Package | |
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| Receive Initial Bids and Select Buyers to Proceed to Second Round | |
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| Valuation Perspectives-Strategic Buyers vs. Finacial Sponsors | |
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| Second Round | |
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| Conduct Management Presentations | |
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| Facilitate Site Visits | |
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| Provide Data Room Access | |
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| Distribute Final Bid Procedures Letter and Draft Definitive Agreement | |
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| Receive Final Bids | |
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| Negotiations | |
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| Evaluate Final Bids | |
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| Negotiate with Preferred Buyer(s) | |
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| Select Winning Bidder | |
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| Render Fairness Opinion | |
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| Receive Board Approval and Execute Definitive Agreement | |
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| Closing | |
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| Obtain Necessary Approvals | |
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| Shareholder Approval | |
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| Financing and Closing | |
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| Negotiated Sale | |
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| Questions | |
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| Bloomberg Appendix | |
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| Buy-Side M&A | |
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| Buyer Motivation | |
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| Synergies | |
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| Cost Synergies | |
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| Revenue Synergies | |
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| Acquisition Strategies | |
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| Horizontal Integration | |
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| Vertical Integration | |
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| Conglomeration | |
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| Form of Financing | |
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| Cash on Hand | |
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| Debt Financing | |
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| Equity Financing | |
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| Debt vs. Equity Financing Summary-Acquirer Perspective | |
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| Deal Structure | |
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| Stock Sale | |
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| Asset Sale | |
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| Stock Sales Treated as Asset Sales for Tax Purposes | |
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| Section 338 Election | |
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| 338(h)(10) Election | |
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| Buy-Side Valuation | |
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| Football Field | |
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| Analysis at Various Prices | |
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| Contribution Analysis | |
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| Merger Consequences Analysis | |
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| Purchase Price Assumptions | |
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| Balance Sheet Effects | |
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| Accretion/(Dilution) Analysis | |
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| Acquisition Scenarios�I) 50% Stock / 50% Cash; II) 100% Cash; and III) 100% Stock | |
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| Illustrative Merger Consequences Analysis for the BuyerCo / ValueCo Transaction | |
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| Questions | |
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| Bloomberg Appendix | |
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| Solutions to Selected Questions | |
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| Afterword | |
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| Bibliography and Recommended Reading | |
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| Intel | |