M&A Financial Modeling
Hi everyone,
I have an interview for an M&A summer internship coming up and want to know what types of financial modeling is typical as an M&A intern and where I can find tutorials online? I have begun learning integrated financial models and using ASimpleModel.com. Are there better places?
Thanks a lot,
Nate
Macabacus is better and free. But real talk: you won't be doing much financial modeling this summer. Familiarize yourself with PPT and prepare yourself to do a good (accurate) job at the tedious tasks you're going to start out on
Thanks for the tips. I expected PPT to be a good part of what I'll be doing.
Yup do the modeling on your own time when waiting for tasks from analysts, etc. But don't make a big deal / lot of noise out of it. You'll be excited because it's your summer internship, but the people working their full time just want to get home each day so prioritize the tasks at hand...
Hey Nate, I'm willing to help out. Check your inbox.
M&A - Model (Originally Posted: 10/25/2014)
Hi!
I was wondering if someone could help me a bit. I'm sitting here with projected income statements and balance sheets for my acquirer XYZ and target ABC. I have projected this five years ahead. My task after projecting this is to make a pro forma income and balance sheet for the new corporation, as well as the income statement and balance sheet five year ahead projections.
Deal is some cash and some shares. My thougts:
Cash + Stock (ABC's Equity) + Liabilities = Pay for ABC's Assets
Pay for ABC's Assets - Book value of Assets = Goodwill
However, there is a huge difference in the book value of assets and what XYZ is paying, so the goodwill part is very, very large. I mean, the pay is like 1USD billion and the book value of assets are like 300USD million. So my guess is that i have done something horribly wrong. Yes, i know the book value of assets is not a good measurement and that it should be the FMV of the assets (any ideas how to find the FMV of ABC's assets?).
Keep in mind - this should be a simple merger model. Not a super-advanced one. If someone has some pointers or a simple merger model with income and balance sheet projections for the new corporation i would very much appreciate it.
Thanks. A nice weekend to you all.
Goodwill = EQUITY purchase price - Book equity + write-off of existing goodwill - write up of PPE and intangibles - write down of deferred tax liability + newly created deferred tax liability
Your equity purchase price = sources of funds (your cash and shares)
Ok, thanks! Do you have any pointers on how to find the write-up of PPE and Intangibles?
is it for school work? if so, just make up some % increase.
However, there is a huge difference in the book value of assets and what XYZ is paying, so the goodwill part is very, very large. I mean, the pay is like 1USD billion and the book value of assets are like 300USD million. So my guess is that i have done something horribly wrong. Yes, i know the book value of assets is not a good measurement and that it should be the FMV of the assets (any ideas how to find the FMV of ABC's assets?).
Keep in mind - this
During business combinations, the acquirer should mark book value of the target's assets to fair value, causing you to recognise a revaluation gain/loss against shareholder's equity. It is the difference between the fair value of the target's assets and purchase price allocable to each of those assets that should be counted as good will.
Your question on how to calculate fair value has no straight forward answer, as this would depend on what type of assets are held by the target company and the current state of the market for those asset if oneexists or expectations of future cash flows of those assets (if no market exists this is what you resort to).
I assume that you are an insider who has been 'brought over the wall' and therefore have access to independent valuations that the target has prepared? Or are you modelling this transaction from a purely hypothetical/academic perspective? I would proceed differently depending upon the context
Unless you access to appraisals for real estate or fixed assets, there is not much you can do. You can create models for the different types of intangible assets besides goodwill, i.e. Customer relationships, brand value, employment contracts and non-competes, patents, etc. Most likely just pick a number and use it, unless the deal is going to close soon, you will have none of this info.
if not a distressed deal, there likely no change in the inventory or accounts receivable.
Quick, need M&A model!! (Originally Posted: 05/19/2009)
Anyone have any M&A model templates they could send?? Need one badly!!! I work for a RE investment co and havent seen any M&A since my ibank training days.
Anyone have any ideas?
Dude what the fuck are you babbling about. An M&A Template?? Wow.
Not sure what you're talking about. DCF, LBO, etc.?
Why don't you just go to docstoc and search for what you're looking for?
I never say this, but you are TTT.
need an LBO model. wow docstoc is amazing, thanks.
to all you other homos- go back to making pitchbooks
Valuation models for M&A involving investment advisors (Originally Posted: 09/30/2014)
Hi guys,
First-year risk analyst here - got pulled into my firm's new M&A division. I'm looking for a bit of guidance in the right direction. Currently working on an M&A deal involving investment advisors. Any guidance on what would be the best valuation model to use for these specific type of businesses? FCFF/FCFE after normalizing cash flows? Any input is appreciated!
Cheers
If you provide some more information about your business and the current condition of your business then anyone is able to answer your question.
M&A Model Question (Originally Posted: 08/17/2015)
Given a target company worth 10 million trading at a 15x P/E multiple, 10 million of earnings, 1% Interest on cash, and 2% interest on debt, calcuate the following. 1. How much can we afford to pay in a 100% all stock transacion so the deal is still Accretive. 2. How much can we afford to pay in a 100% all cash transacion so the deal is still Accretive.
Anybody have the explanation on how to get to an exact dollar price for each purchase method. I know how to get the cost of cash, debt, stock, but I do not see the connection to dollar price?
Any help appreciated, thanks
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