Summer Research Analyst - some questions on M&A
Currently interning at a boutique investment bank specializing in M&A advisory, and my responsibilities are to conduct research reports on companies. The MD doesn't tell me anything at all besides, "here's a company, get me a report by Wednesday" and I have to essentially figure everything out through Google and looking through some previous work. Totally fine with this, but I have questions that when I email him he doesn't even respond or address them.
If you guys don't mind, I'll really appreciate it:
-What are the most important financial metrics to consider in an M&A transaction?
-What are the best resources to gather research on companies? I'm currently Googling everything now, so the depth of the research isn't all that deep. I think my university has Bloomberg Terminals but I'll have to check on Monday - are there any free resources for now?
-If you were to write a report on a company in the context of an M&A, what are the most important sections that you would touch upon?
Ideally I'll keep this post updated with more questions, and anyone who is looking to gain some insights into the industry can stop by and learn from the more experienced.
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Props for doing an unpaid internship. I'll try to help where I can, here are some of my thoughts: -Most common ones are transaction multiples (P/E, EV/EBITDA, ND/EBITDA), growth (EPS, revenue, EBIT, EBITDA), liquidity (Net Interest Cover, Net Cash), -For deal history, you can use websites like mergermarket. For newsflow, FT. -Some important considerations are: Barriers to entry, Accretive/dilutive, synergies, management track record, political factors (e.g. Chinese buying US companies).
Either manually enter data from the 10k or use Yahoo Finance. Both will show you historical financial data
You're asking a very broad question, so you'll get a broad answer. Your focus should be both on financial impact, feasibility, and on "synergies" both positive and negative. What will it look like operationally afterwards? Obviously that's going to vary massively by industry, size of companies involved, etc. For example bank mergers will allow them to expand geographically and use their capital more efficiently(financial synergies) whereas a high-tech merger may result in acquiring access to patents that the acquiring company can distribute over a much broader channel than the target would ever have been able to (positive revenue synergies)...or you might have a "negative synergy" such as being forced to sell vacated offices at a loss to book value.
Thank you both. As for research, I've been told that 10-k/Q Company reports, Yahoo Finance, Bloomberg are good resources to use. What about research on privately-traded companies where they don't file these reports?
Privately-traded - Pitchbook is the gold standard. Unfortunately it's extremely expensive.
I've never used it but this might work, I've seen people at my school use it: https://www.preqin.com/
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