M&A Financial Modeling

Thanks for the tips. I expected PPT to be a good part of what I'll be doing.

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?

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.

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

If you provide some more information about your business and the current condition of your business then anyone is able to answer your question.