Scribd
Upload
27 views25 pages

M - A - Introduction Feb 2024 Session 1

The document outlines a course on Mergers and Acquisitions (M&A), covering topics such as event studies, strategy, deal valuation, and regulatory considerations. It discusses global M&A trends, noting a significant slowdown in 2022 and 2023 due to factors like recession fears and rising interest rates, while providing an optimistic outlook for 2024. Additionally, it differentiates between mergers and acquisitions, detailing motivations for M&A and types of deals.

Uploaded by

Neeraj Rana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
27 views25 pages

M - A - Introduction Feb 2024 Session 1

The document outlines a course on Mergers and Acquisitions (M&A), covering topics such as event studies, strategy, deal valuation, and regulatory considerations. It discusses global M&A trends, noting a significant slowdown in 2022 and 2023 due to factors like recession fears and rising interest rates, while providing an optimistic outlook for 2024. Additionally, it differentiates between mergers and acquisitions, detailing motivations for M&A and types of deals.

Uploaded by

Neeraj Rana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 25

MERGERS AND ACQUISITIONS

INTRODUCTION
Course Outline

1. Introduction
2. Event Studies – Reaction to M&A Deals
3. Strategy
4. M&A Process
5. Deal Valuation
6. Deal Structuring
7. Accounting for Acquisitions
8. Regulatory considerations
9. Takeover Tactics and Defenses
Reference Sources

 Corporate Finance-Theory And Practice –


Ashwath Damodaran

 https://www.nytimes.com/topic/subject/mergers
-acquisitions-and-divestitures

 https://www.vccircle.com/deal-type/m-a

 HBS/Ivey Cases and Reading Material


Course Evaluation

component Weightage
Class work 30% Ongoing group work & class
participation
Assignment 40 % M&A Deal analysis/
Pitch Book Preparation
Final Exam 30%
background
Global Deal Trends
Trends in Global M&A

 Record Breaking M&A Deals in 2021


 Pent up demand, after almost complete stand still in 2020
 Strong demand for Tech resources, Digital and Data assets
 Transactions scheduled for 2020 took place in 2021
 Companies restructured to build resilience, reduce costs, and
strategically reposition themselves for future growth.
 Slow Down in 2022
 Further slowdown in 2023
 Global deal values halved in just two years to US$2.5tn in 2023
from their peak of more than US$5tn in 2021.
 Global deal volumes also declined, down 17% from just over
65,000 deals in 2021 to around 55,000 deals in 2023.
Reason for Global M&A Slowdown in
2022/2023

 Fears of recession
 Ongoing Wars Ukraine/Russia;
Palestine/Israel
 Interest Rates Upward Trend /Bond yields
 Pullback in leveraged finance
Outlook for 2024

 The repeated hikes in interest rates over the past two years
appear to have ended
 Investors in 2023 were concerned about a possible recession, but
they have entered 2024 with more optimism
 Megatrends, including digitalisation and decarbonisation, is
bringing about major transformations, companies are re-
evaluating their strategies and looking to reinvent to stay ahead.
Scenario in India
Deals in 2022
2023 Deals in India
Experts views M&A Outlook for 2024

 https://www.youtube.com/watch?v=ewzAZsD4V8Y

 https://www.youtube.com/watch?v=Gj52VMtRjyk
Rationale and
forms of M&A
Deals
Before Merger

Shareholders of X Shareholders of Y

X Ltd Y Ltd
After Merger

Option 1 Option 2 Option 3

Shareholders Shareholders Shareholders


of X & Y of X & Y of X & Y

X Ltd Y Ltd New co Z

Note- Based on the swap ratio, the shareholders of the


transferor company are issued shares of transferee
company
Merger Definition

 Two firms agree to integrate their operations. The merged entity may either take
an entirely new name and new identity, or the dominant player may
completely absorb the smaller players and retain its own identity.
 Merger can be done by two methods, namely:
 Merger Through Consolidation two or more companies combine to form an entirely
new company. The new combined company is legally a new entity.
 For example, JP Morgan and Chase Manhattan became JP Morgan Chase; Exxon and Mobil
became Exxon–Mobil; Sandoz Laboratories and Ciba-Geigy merged to form Novartis; Vadafone and
Idea
 Merger Through Absorption Here, two or more companies combine into any of the
existing participating company. Generally, in absorption the dominant player completely
absorbs the smaller players and retains its own identity.
 For example, Sun Pharma and Ranbaxy ; SBI Mergers with subsidiaries; Larsen &Toubro and
Mindtree, HDFC Bank and HDFC Limited; Holicim Lafarge
Acquisition

 Acquisition is a business transaction where one firm buys


another firm The acquiring firm takes possession of another
business either through share purchase or asset purchase.
 It is generally characterized by the purchase of a smaller
company by a much larger one. A company acquires the
ownership/stake in other companies usually without any
combination of the companies.
 The acquiring company controls other companies by acquiring
their assets or management.
 Example: Tata Corus; Airtel Zain; Hindalco Novelis
Difference Between Mergers
& Acquisition
Merger Acquisition
 Consideration  Consideration may be
discharged by issue
of shares of by cash or shares.
transferee co.
 Shareholders of  Acquirer company
merging co. will shareholders have
become share-
holders of Merged co. controlling interest.
 Usually by
negotiations.  May be friendly or
hostile.
Caveat

 The Terms M&A are often used interchangeably


Rationale for deal?

Hand out list


2023 Deals in India
Motivations for Mergers and Acquisitions

 Synergy
 Operating
 Financial
 Diversification – (New Product, New Market, Both)
 Caveat - Portfolio Theory /Developing countries
 Strategic Realignment
 Regulatory; Technological; Market
 Q Ratio- Buying undervalued assets
 Mismanagement
 Hubris
 Tax Consideration
M&A Waves

7th Wave? Mega Deals


AB Inbev’s
acquisition of SABMiller,
creating a $104 billion
beverage company;
Pfizer and Allergan’s
announced a $160 billion mer
ger
(later withdrawn)
chemical companies
Types of M&A Deals

 Horizontal
 Vertical
 Conglomerate

 Disney and Viacom/ – Vertical


 Exxon and Mobile – Horizontal
 Adani – NDTV – Conglomerate

You might also like