Corp Dev Case Assignment
Made it to a case portion for a Corp Dev role in the media industry, and I'm unsure about the approach I need to take. The case wants me to identify an acquisition target for the company based on my understanding of the company and the next 12 months, explain my logic, and create a presentation.
They link to a database of the company's financial documents - this tells me that I need to build a model of some kind. But if the assignment is to find an acquisition target, I'm not sure what purpose modeling the company's finances serve - maybe to get an idea of cash flows?
Or it's a more narrative/market research-driven case, and I might be overthinking it. This is my first corp dev case, so sorry if any of this sounds dumb.
You probably need to show proforma impact on the buyer, accretion/dilution and go-forward financials, as well as determine how much cash they are able to pay, what kind of leverage they can use, etc.
Above is correct. It’s easy to find “attractive” targets, but if the company can’t afford to purchase it and there is no opportunity for some synergies for cost savings then they aren’t actually attractive to your company even if it appears so.
Example: Comcast CEO has said he would purchase Hulu if available but not only is it unlikely Disney would sell, but Comcast would likely be unwilling to pay the price premium required and most certainly wouldn’t see the return needed to make the acquisition attractive.
Got it. This was super helpful. I took an online modeling course and I have a much clearer idea of how to go about this but I have follow up questions:
Thank you so much for your help so far. It’s been a huge lifesaver.
1) A traditional M&A model probably doesn't work, it could be a baseline for valuing synergies but your actual company purchase price will need to come from some form of multiples analysis so you would look at common metrics from groups that have exited. For example, that start ups I worked with tend to value on a multiple of ARR. Granted, that includes some forecasting so you're honestly winging it. Doesn't hurt to google the industry + startup multiples to get an idea of what might be key.
2) see #1
Thanks! I found an M&A modeling course that covers these things. I'll use that to prep before starting.
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