Hey all,
First time posting here. I have called round a few friends who work in IB and none can give me a clear confident answer to this. I have to present a deal for an interview.
If we have Company A and Company B. They merge together in a pure 'merger of equals' so each company has a 50/50 stake in the new combined entity. Technically, in this deal there is no target, so how am I suppose to calculate multiples for this or comment on valuation? Or can I not do so? In the deal, Company A exchanged its shares of one share for every 0.155 in the new combined entity which is effectively Company B with a new name. Does that make Company A the target? On Merger Market, this seems to be what it is suggesting and this is what the stats and multiples on there are calculated on the basis of. But I want to be sure.
Appreciate any help!
While it may be pitched as an MoE, one of the entities equity survives. That's the acquirer. Sounds like A is the target.
For transaction value, take the offer price, apply to FDSO (assume shares vest in CoC situation) for equity value, add net debt to get to EV and calc EV / EBITDA multiple like you would in any other situation. Can do w/ or w/o synergies (run rate or as realized).
If you want PF valuation for the acquirer, calculate shares issued and add to your FDSO. Also calculate PF net debt by adding incremental acquisition debt and PF EBITDA (w/ or w/o synergies) to get your PF EV/EBITDA multiple. Keep in mind, equity prices may be affected by M&A arbitrage (time value of money to close) and probability of closing adjustments (regulatory issues etc.)
Merger of Equals Valuation (Originally Posted: 09/21/2017)
Hello All,
Does anyone know how to value a company when a deal was a merger of equals. For example, the merger of Envision and AMSURG.
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