M&A Valuation Process: Key Questions and Considerations PPT

This PPT slide, part of the 118-slide Mergers & Acquisitions Training PowerPoint presentation, outlines a structured approach to the valuation process in mergers and acquisitions, emphasizing the need to address critical questions related to business capabilities, synergies, and strategic alignment. It is divided into 4 main components, each detailing specific roles and considerations.

The first section, "Develop Core Business Expectations," focuses on creating a five-year cash flow forecast. It identifies key sensitivity areas such as market growth activity, customer dynamics, cost reduction strategies, and capital expenditures. This foundational analysis sets the stage for understanding the target's financial health and operational viability.

Next, "Value Target as Stand Alone Business" emphasizes the importance of thorough due diligence. It includes historical financial analysis, future projections, discounted cash flow (DCF) analysis, and comparisons with similar businesses. The section also highlights the need to explore other potential buyers and exit strategies, such as spin-offs or liquidations, which can influence the valuation.

The third component, "Value Potential Synergies," examines how the target aligns with the acquirer's strategic goals. It assesses cost reduction opportunities and potential revenue synergies, both positive and negative. This analysis also considers customer and competitive responses, which can significantly impact the integration process.

Finally, "Develop Required Capital Structure" addresses the financial implications of the acquisition. It involves forecasting combined cash flows and identifying possible financing sources, including equity and secured debt. The investment bank's role is crucial here, as it evaluates affordability and risk associated with the acquisition.

Overall, this slide serves as a comprehensive roadmap for executives navigating the complexities of M&A valuation, ensuring that all critical factors are systematically addressed.

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M&A (Mergers & Acquisitions) Synergy Due Diligence Mergers & Acquisitions Cost Reduction Capital Structure Financial Analysis M&A