This PPT slide, part of the 28-slide Guide to Acquisition Strategy and Valuation Methodologies PowerPoint presentation, presents an overview of Pro Forma Analysis, a financial method used to project results based on current or anticipated figures. It highlights key inputs and considerations essential for effective analysis.
The section titled "Key Inputs to Consider" outlines critical factors influencing the analysis. It begins with the financing mix, emphasizing the choice between stock and cash. This decision can significantly impact the overall financial structure. Next, it addresses financing costs, particularly the incremental debt incurred for acquisitions. This includes both the interest expense on newly issued debt and the potential loss of interest income from cash reserves.
Accounting treatment is another vital aspect, where the slide notes the importance of how excess purchase prices are allocated to asset write-ups. This allocation affects depreciation and amortization schedules, which are crucial for accurate financial reporting. Transaction costs are also mentioned, indicating that these can influence the overall financial picture. Finally, taxes are listed as a fundamental consideration, impacting net results.
The "Considerations" section delves deeper into the implications of the analysis. It discusses the target's impact on pro forma growth and margin profiles, including potential multiple impacts and diversification levels. Synergy analysis is highlighted, focusing on opportunities for cross-selling and cost savings. It also raises the question of breakeven amounts, differentiating between what's required and what's realistically achievable.
The slide concludes with a note on balance sheet impacts, including credit ratings, which can affect future financing options. This comprehensive overview serves as a critical guide for executives assessing the financial ramifications of acquisitions and strategic decisions.
This slide is part of the Guide to Acquisition Strategy and Valuation Methodologies PowerPoint presentation.
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