Mergers and Acquisitions

  • fix the equity
  • fix the debt
  • fix the control

Topic 1
Identifying Opportunities and Pitfalls

Topic 2
Valuation for M&A and Negotiating the Price

Topic 3
Financing the Acquisition

Topic 4
Creating Value through Divestitures

Frontier in Knowledge
Kuala Lumpur, Malaysia

Workshop on Mergers and Acquisitions

Prof. Ian Giddy
New York University

What makes a merger succeed or fail? What are the tools and techniques of valuation for M&A, and how can cash flow analysis be used to help structure acquisition financing? Why are financial and business restructuring essential components of post-merger success?

About this Workshop

In today's uncertain Asian economic environment, managers often face decisions concerning the acquisition or divestiture of companies and business units. This is a two-day workshop focussing on the role of mergers and acquisitions in developing competitive advantage and shareholder value. Why do mergers that looked great on paper fail in reality? How does one value companies acquiring, or being acquired? What is the best negotiation strategy? What does it take to make "synergy" come to life? How can a merger be financed in such a way as to retain the merged entity's flexibility? When do leveraged buy-outs make sense? Using real-world case studies and hands-on applications, the course introduces the key principles and techniques of successful mergers, acquisitions, and divestitures.


Bankers, executives or professionals whose career advancement or security is tied to the ability to identify, execute, and implement a successful acquisition strategy. Executives with strategic or financial responsibilities and the bankers and lawyers who support them will gain a critical understanding of the elements of mergers and acquisitions that create "winners" and "losers" among corporate buyers

About the Instructor

Dr. Ian Giddy , a finance professor at New York University's Stern School of Business, has taught finance at NYU, Columbia, Wharton, Chicago and in 30+ countries abroad for the past two decades. He was Director of International Fixed Income Research at Drexel Burnham Lambert from 1986 to 1989. The author of more than fifty articles on international finance, he has served at the International Monetary Fund and the U.S. Treasury and has been a consultant with numerous corporations and financial institutions in the U.S. and abroad. As a banker and consultant he has been involved in the growth of the M&A market in the USA, Europe and Asia. He is the author or co-author of The International Money Market,, Cases in International Finance , Global Financial Markets, Asset Securitization in Asia and The Hudson River Watertrail Guide.

Your restructuring course was without a doubt the most engaging and useful course I have or expect to have taken ... Your sessions were exceptionally well prepared and your idea of having groups play the parts of conflicting parties to negotiate a resolution was particularly instructive.
- Corporate participant, USA
Thank you for a great learning experience!
- Swiss banker

Course Materials

Participants will be provided with a comprenesive package of merger-related materials, including copies of the instructor's presentations, valuation spreadsheets, case studies, and sample docuimentation.

Recommended Book

Donald DePamphilis, Mergers, Acquisitions and Other Restructuring Activities (Academic Press)

Reading: Valuing a Business


Day 1 Topics  Case Studies
Morning M&A Success and Failure Factors
  • Understanding sources of gain from an acquisition
    • Top-line and bottom-line synergies, financial restructuring, business restructuring
  • Merger fallacies
    • Size, vertical integration, diversification
  • Understandiing the costs and risks
    • Up-front and post-merger costs, integration costs, synergy pitfalls
  • Evidence on success factors
    • Screening, price, negotiation, rapidity of integration
  • Management Buy-Outs
    • What is the formula for success?

Case: Ciba-Geigy & Sandoz (discussion)
Case: Ciba's Acquisition of Allied Colloids Part 1
Part 2
Discussion of what it takes to succeed in a merger, based on synergies and post-merger restructuring
Afternoon Valuation Tools and Techniques for Mergers
  • Valuation methods
    • Book value, market value, comparables and ratios, break-up value, cash flow analysis
  • Pre- and post-merger valuation
    • Incremental free cash flows, adjusted for sysnergies, integration costs and risk factors
    • Calculating the appropriate discount rate
    • Deadweight costs of the transaction
    • Effects on seller and buyer per-share value
  • Price negotiation
    • Distribution of the benefits and allocation of risks

Case: Feng-Shui Compass Company

Case: Ipoh-Kelantan
Use of ratios and cashflow methods, applied by groups to negotiate the price in a merger.
See also ipoh.xls
Case: Bank of America-FleetBoston
Day 2
Case Studies
Acquisition Financing
  • Debt versus equity?
    • Debt capacity analysis
  • Sources of finance
    • Banks, bonds, private equity and internal resources
  • The sequence of post-acquisition funding
    • Bridge loans, paydowns, sale of assets, high-yield bonds and the sequence of post-acquisition funding
  • Creative financing
    • Hybrid securities, participating debt, asset-backed securities
  • MBO funding
    • Senior and subordinated debt, venture capital capital funding, inside equity
Case:  Le Meridien Hotels
Discussion of the creative financing techniques that enable acquisitions such as this one to happen.
Case: Cap des Biches Proposed LBO
See also capdesbichesb.xls
Case: EMAS -- After the LBO

Divestitures: Valuation and Techniques to Maximize Realized Value
  • Why divest?
    • Pro-active, defensive and involuntary breakups
  • How to divest?
    • Sell to another company, or to the public, or distribute to shareholders, or arrange an MBO
  • Tax aspects
    • As a rule the seller is taxed if paid in cash, otherwise not
  • Valuation of the business
    • Compare pre-divestiture, stand-alone, and value to acquirer
Case: Pinault-Printemps-Redoute
and breakup.xls

Group analysis of breakup motivation and possible strategies, and valuation of the business unit | | | | contact
Copyright ©2003  Ian Giddy. All rights reserved.