8. Mergers and Acquisitions Toolkit - Overview and Approach.pptx
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This document provides an overview of a mergers and acquisitions toolkit created by former JP Morgan investment bankers and McKinsey and Deloitte consultants. The toolkit includes frameworks, tools, templates, tutorials and other resources to guide companies through the M&A process. It outlines a six-phase approach for mergers and acquisitions: defining an M&A strategy, identifying target companies, building a business case, conducting due diligence, executing the transaction, and integrating the merged companies. The toolkit aims to increase success rates for M&As by providing best practices and lessons learned from over 4,000 hours of work and experience with over 200,000 executives and consultants.
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8. Mergers and Acquisitions Toolkit - Overview and Approach.pptx
1. 1
Best Practices
Frameworks Templates
II. Identify Target
Companies
III. Build a
Business Case
and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the
Post Merger
Integration
I. Define your
M&A Strategy
Mergers and Acquisitions Toolkit
Overview and Approach
2. • This Toolkit was created by former JP Morgan Investment Bankers, and
McKinsey & Deloitte Consultants, after more than 4,000 hours of work. It is
considered the world's best & most comprehensive Mergers and Acquisitions
Toolkit. It includes all the Frameworks, Tools & Templates required to improve the
M&A capability of your organization and boost your personal career.
• Join the 200,000+ Executives, Consultants & Entrepreneurs who are already
leveraging our Management Consulting Toolkits to improve the performance of
their organization and boost their own career.
• If you have any questions, send us an email at support@domontconsulting.com
and one of our ex-McKinsey, Deloitte & BCG Management Consultants will get
back to you within 2 business days.”
Introduction
2
Aurelien Domont
Management Consultant
Domont Consulting Managing Director
3. There are 3 main corporate growth strategies
3
Organic Growth
Strategy
Mergers and
Acquisitions Strategy
Strategic Alliances
Strategy
1 2 3
4. Organic Growth Strategy
4
Organic Growth
Strategy
Description Advantages Disadvantages
Often perceived as the
default growth option
for companies, an
organic growth
strategy relies on
developing a
company’s internal
resources and
capabilities
• Provides deeper first-hand
knowledge that is likely to
be internalized in the
company
• Helps spread investment
over time and reduce
upfront commitment
• There are no availability
constraints, that is to say
that the company is not
dependent on the
availability of suitable
acquisition targets or
potential alliance partners
• Strategic independence
• Creation of new activities
within the existing culture
environment
• Can be slow, expensive,
and risky
• Difficult to use existing
capabilities as the platform
for major leaps in terms of
innovation, diversification,
or internationalization
5. Mergers and Acquisitions Strategy
5
Mergers and
Acquisitions
Strategy
Description Advantages Disadvantages
Mergers and
acquisitions (M&A)
bring together
companies through
complete changes in
ownership. They have
been used by
companies for
centuries and remain a
major way for
companies to expand
rapidly
• Business extension: M&A
can be used to extend the
reach of a firm in terms of
geography, products, or
markets
• Building capabilities: M&A
may increase a company’s
capabilities
• Increase market power by
reducing competition and
increasing bargaining power
with suppliers
• Increase efficiency: by
sharing resources and
capabilities
• Speed: M&A allows acquirers
to act fast
• Financial efficiency: by
combining the 2 balance
sheets
• Tax efficiency
• Important investment
upfront
• Potential culture clash
between the 2 companies
• High failure rate
• Sometimes excessive initial
valuations, exaggerated
expectations of strategic fit,
and underestimated
problems of organizational
fit
6. Strategic Alliances Strategy
6
Strategic
Alliances
Strategy
Description Advantages Disadvantages
Two companies share
resources and activities to
pursue a common
strategy.
In terms of ownership,
there are two main kinds
of strategic alliance:
equity and nonequity
alliances. Equity alliances
involve the creation of a
new entity that is owned
separately by the partners
involved (e.g., joint
venture). Nonequity
alliances do not involve
the commitment implied
by ownership and are
often based on contracts
(franchising, licensing)
• Requires less
commitment than other
forms of expansion
• Scale alliances can
provide economies of scale
• Access alliances involve a
company allying in order to
access the capabilities of
another company that are
required to produce or sell
its own products and
services
• Complementary alliances
involve companies
combining their
complementary capabilities
• High failure rate (~50%)
• Sometimes suffer from
miscalculations in terms of
strategic and organizational
fit
• The lack of control on
either side can lead to
particular issues of trust
and coevolution
7. This Toolkit will focus on Mergers and Acquisitions
7
Organic Growth
Strategy
Mergers and
Acquisitions Strategy
Strategic Alliances
Strategy
1 2 3
8. Main problem of the M&A strategy
More than half of M&As fail to reach their value creation objectives.
8
55%
45%
Mergers & Acquisitions’ ability to reach
value creation objectives*
Failure rate Success rate
*Consolidation of multiple surveys from New York Times, Harvard Business Review, and Australia Financial Review
9. Our solution
To increase your M&A success rate, our ex-Deloitte & McKinsey management consultants and JP Morgan
investment bankers have created a Mergers & Acquisitions Toolkit including 8 components.
9
Frameworks
Tools
Templates
Step-by-step
Tutorials
Video Training
Real-life
Examples
Best Practices
Advice from
tier-1
Management
Consultants
What’s
inside our
Toolkit?
10. Objectives
The M&A Toolkit includes frameworks, tools, templates, tutorials, real-life examples, video training and best
practices to help you:
10
• Increase your M&A success rate with our 6-phase M&A approach: (I) Define your M&A strategy, (II) Identify target
companies, (III) Build a business case and financial modeling, (IV) Conduct due diligence, (V) Execute transaction, (VI)
Conduct post-merger integration
• Define your M&A strategy: (1) Company mission, vision and values, (2) M&A strategic objectives and key performance
indicators, (3) M&A team, (4) M&A guiding principles, (5) Target screening criteria
• Identify target companies: (1) Potential target companies and data collection, (2) High-level assessment of potential target
companies, (3) Shortlisted potential targets, (4) Financial statements analysis, (5) Business valuation: DCF model, comparable
company analysis, and precedent transaction analysis, (6) Targets approved for the business case phase
• Build a business case and an M&A financial model: (1) Strategic benefit, (2) Feasibility, (3) Financial benefit, (4)
Comprehensive M&A financial model including acquirer model, target model, merger assumptions & analysis, and pro forma
model, (5) Simple Financial model including integration cost, revenue synergy, cost synergy, NPV, ROI, and IRR, (6)Letter of
intent or term sheet
• Conduct due diligence(CDD) to identify the likely future performance of a company: (1) Work plan including key business
case hypotheses and assumptions, (2) Due diligence to validate key hypotheses and assumptions, (3) Updated business
valuation, (4) Recommendation to make (or not) a formal offer to acquire the target company
• Execute transaction: (1) Deal structure, (2) M&A negotiations, (3) Signing and closing the M&A deal
• Conduct successful post-merger integration to ensure the company reaches its cost and revenue synergy targets: (1)
Post-merger integration strategy and high-level plan, (2) Post-merger integration detailed plans, (3) Implementation and
monitoring
11. Approach
The Mergers & Acquisitions Toolkit includes a 6-phase approach that we have built and refined over the past 20 years through constant
trial and error. The good news is that you don’t have to waste your time, energy, and money going through that lengthy trial-and-error
process. You can simply leverage our work and customize it based on the specificities of your organization.
11
Pre-Announcement Post-Announcement
Announcement
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
12. Approach
The Mergers & Acquisitions Toolkit includes a 6-phase approach that we have built and refined over the past 20 years through constant
trial and error. The good news is that you don’t have to waste your time, energy, and money going through that lengthy trial-and-error
process. You can simply leverage our work and customize it based on the specificities of your organization.
12
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
13. In the next slides, you’ll see a small preview of Phase I of our M&A
approach
13
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
14. We identified 5 [insert your own number] M&A guiding principles
14
1 Insert a quick description of your guiding principle (e.g., Ensure that decision-making and approval procedures are simple,
robust and transparent)
2 Insert a quick description of your guiding principle (e.g., Ensure strategic alignment between the company vision and
mission and the M&A strategic objectives)
3 Insert a quick description of your guiding principle (e.g., Establish joint ownership of a shared vision, strategy, and journey
between our company and the acquired company)
4 Insert a quick description of your guiding principle (e.g., Pay attention to retaining key talents)
5 Insert a quick description of your guiding principle (e.g., Focus on transactions with an internal rate of return (IRR) that
delivers an acceptable margin above cost of capital)
Insert title of your
guiding principle (e.g.,
Simple decision-making
process
Insert title of your
guiding principle (e.g.,
Strategic alignment)
Insert title of your
guiding principle (e.g.,
Shared vision)
Insert title of your
guiding principle (e.g.,
Key talent)
Insert title of your
guiding principle (e.g.,
Internal rate of return)
15. We identified 5 [insert your own number] screening criteria to help us
select the right companies to potentially acquire
15
Strategic alignment
Revenue
Market
Positioning
Risk
The acquisition of the target company
needs to help us reach at least one of
our M&A strategic objectives
The target company needs to sell its
products mainly in the Asian market
Acceptable impact on the group’s
financial and non-financial risk
profile
The target company needs to
have a revenue above $10M
The target company needs to have
a premium positioning and good
reputation
This is an example. Replace this text
using your own criteria.
16. In the next slides, you’ll see a small preview of Phase II of our M&A
approach
16
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
17. Based on our M&A strategy, we identified 20 [insert your own number]
potential target companies, including the 10 listed below
17
CEO Main activity Revenue Profit Market share
Number of
employees
Strategic rationale
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
Insert company name
Insert your own
text
Insert your own text
Insert your own
text
Insert your
own text
Insert your own text Insert your own text Insert your own text
To access a more comprehensive list of our potential target companies, open the Excel sheet “Target companies”
You can replace the column header
based on what information you want to
emphasize.
Select the top companies you want to
emphasize. If someone wants to see the
more comprehensive list, open the
Excel sheet “Target companies”
18. Summary of our financial statement analysis
Profitability ratios
18
Return on capital
employed(%)
Return on net assets (%)
Return on funds
employed(%)
Return on equity
(%)
Return on sales
(%)
Worst peer Best peer
5% 8% 9%
2% 4% 8%
X%
X% X%
X%
X% X%
X%
X% X%
Company X
Company Y
Company Z
For more details on how to conduct a financial
statement analysis, open the folder “Financial
statement analysis”
19. In the next slides, you’ll see a small preview of the Phase III of our M&A
Approach
19
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
20. Document Purpose
20
The purpose of this document is to provide enough information to answer the question “should we acquire the
company [insert company name]?” To answer this question, we will use an M&A framework that includes 3
components:
Financial Benefit
Strategic
Benefit
Feasibility
There are many M&A frameworks that
you could use. Based on our experience,
this is the most practical one.
21. Each component has an underlying question that we will have to answer to
identify if it is a good strategic initiative to acquire company Y
21
What would be the financial benefit of the deal?
What would be the feasibility of the deal?
What would be the strategic
benefit of the deal?
Financial Benefit
Strategic
Benefit
Feasibility
22. If the answer is “high” or “very high” to the 3 questions, then it means that
acquiring company Y is a good strategic initiative
22
Sweet spot
Financial Benefit
Strategic
Benefit
Feasibility
What would be the financial benefit of the deal?
What would be the feasibility of the deal?
What would be the strategic
benefit of the deal?
23. Let’s start by assessing the strategic benefit of the deal
23
What would be the financial benefit of the deal?
What would be the feasibility of the deal?
What would be the strategic
benefit of the deal?
Financial Benefit
Strategic
Benefit
Feasibility
24. Strategic Benefit
What would be the strategic benefit of the deal?
Vision and
strategic
objectives
M&A strategy
versus organic
growth strategy
M&A strategy
versus strategic
alliance
Insert in this box the way in which this deal will help us deliver on our long-term vision and strategic objectives.
Insert in this box the way in which acquiring company Y is a better option than an organic growth strategy.
Insert in this box the way in which acquiring company Y is a better option than a strategic alliance with company Y.
Very Low Low Medium High Very High
Caption:
Very High
Replace this rating with your own
rating based on the sections below
25. Beside the Cover Page, the M&A Financial Model (comprehensive version)
includes 4 worksheets with different Building blocks
25
Acquirer Target Merger Assumptions &
Analysis
Pro Forma
Debt & Interest
Income Statement
Cash Flow Statement
Balance Sheet
Working Capital
Depreciations
Assumptions with Different
Scenarios
DCF
Accretion/Dilution Analysis
Scenarios
Sources & Uses of Cash
Purchase Price
Goodwill and Purchase Price
Allocation
Pro Forma Closing Balance
Sheet
Transaction Inputs
Impact on Acquirer Intrinsic
Value per Share
Debt & Interest
Income Statement
Cash Flow Statement
Balance Sheet
Working Capital
Depreciations
Assumptions
Debt & Interest
Income Statement
Cash Flow Statement
Balance Sheet
Working Capital
Depreciations
Assumptions with Different
Scenarios
DCF
Merger Integrations
DCF
Capital Structure
Sensitivity Analysis
26. You can create the Acquirer Worksheet in 9 simple steps
26
1. Click on the Acquirer tab and make sure that you do not need to add or remove a building block based
on your specificities
2. Adjust if required the periodicity based on the specificities of your organization
3. Adjust if required the items in each building block
4. Fill in the templates focusing on the 3 financial statements, 3 supporting schedules and your “base
scenario” in your “assumptions” building block
5. Double check that your balance sheet is balanced
6. Create your DCF building block
7. Create more scenarios in the building block “Assumptions”
8. Select the Scenario that will flow in the model
9. Add a Stub period
27. Step 1 - Click on the Acquirer tab and make sure that you do not need to
add or remove a building block based on your specificities
27
28. Step 3 - Adjust if required the items in each building block
28
For example, you may decide to add the item “Dividend payout” by adding a row. Or you
may decide to remove the interest expenses. If required, you may have to add a row in
the assumption building block if it helps you forecast the future dividend payout
29. Insert your assumptions in the building block “Discounted Cash Flow”
29
The discount rate is usually the
Weighted Average Cost of Capital
(WACC). You can open our WACC Model
folder for more details on how to
calculate the WACC
30. Calculate the Net Present Value of Unlevered Free Cash Flow
30
Since $1 earned in the future is worth less than $1
earned today, it is important to calculate the Net Present
Value of Unlevered Free Cash Flow
31. Step 8 - Select the Scenario that will flow in the model
31
Here we selected the scenario 1.
As a result, the
“Selected scenario” will
automatically display
the input from the
“1.Base Case Scenario”.
If we had selected the
scenario 2, the
“Selected scenario”
would have
automatically displayed
the input from the
“2.Pessimistic
Scenario”
The estimated
intrinsic value
per share will
update
automatically
based on
selected
scenario
32. See below a screenshot of the simple version of our M&A financial
model.
32
33. In the next slides, you’ll see a small preview of Phase IV of our M&A
approach
33
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
34. Once you’ve got your “Hypothesis tree” with your hypothesis,
assumptions, sub-assumptions, etc., it’s time to create your work plan
34
Work plan to validate or invalidate your first hypothesis
For more details, open
the Excel sheet “Work
Plan”
Hypothesis #1: The Target Company profit forecast provided by the Board is reasonable
Assumptions & Sub-assumptions
Expected
answer
Actual
Answer
Analyses Data Sources End Product Responsibility Deadline
1. The projected Revenue is reasonable TRUE TRUE See sub-assumptions below See sub-assumptions below See sub-assumptions below Raphael October 5
1a. There is no illogical trend between historic revenues and
projected revenues
TRUE TRUE
Compare Historic and forcasted
revenue CAGR
Financial Due Diligence Vertical Histogramme chart Raphael October 5
1b. The company core capabilities will support the future
revenue growth
TRUE TRUE
Compare Historic and forcasted
revenue CAGR
Financial Due Diligence Vertical Histogramme chart Raphael October 5
1c. The revenue drivers have been identified correctly and
projected in a reasonable way
TRUE TRUE
Compare Historic and forcasted
revenue CAGR
Financial Due Diligence Vertical Histogramme chart Raphael October 5
2. The projected COGS is reasonable TRUE FALSE
Check list of key revenue drivers
identified by the management
Industry report Driver tree John October 10
3. The projected Operating Cost is reasonable
Work Plan
35. In the next slides, you’ll see a small preview of Phase V of our M&A
approach
35
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
36. Structuring the deal
Overview*
There are many ways in which a corporate merger or acquisition may be structured. The goal is not to create the most complex structure, but rather to create a structure that
reflects the objectives of the buyer and the seller fairly.
On a fundamental level, all structures are either mergers or acquisitions, including the purchase or consolidation of either stocks or assets.
At the heart of each transaction are the following key issues that will affect the structure of the deal:
• How will tangible and intangible assets be transferred from the seller to the purchaser?
• At what price will they be transferred, and according to what terms?
• What issues discovered during due diligence may affect the price, terms, or structure of the deal?
• What liabilities will be assumed by the purchaser?
• What are the tax implications for the buyer and the seller?
• What role will the seller have in the management and growth of the underlying business after closing?
• To what extent will third-party consent or government filing or approval be necessary?
• What arrangement will be made for the key management team of the seller, who may not necessarily be among the selling owners of the company?
• Does the buyer currently have access to all of the consideration to be paid to the seller, or will some of these funds need to be raised from debt or equity markets?
And at the heart of each structural alternative are the following 4 basic questions:
1. Will the buyer be acquiring the stock or the assets of the target?
2. In what form will the consideration from the buyer to the seller be made (e.g., cash, notes, securities, or some other form)?
3. Will the purchase price be fixed, contingent, or payable over time on an installment basis?
4. What are the tax consequences of the proposed structure for the acquisition?
36
* Source: Book “Mergers & Acquisitions from A to Z” by Andrew J. Sherman, which we highly recommend
37. Structuring the deal
Stock versus asset purchases
37
Stock purchase advantages and disadvantages
Buyer’s perspective
Main disadvantages
Main advantages
• Preserves the right of the buyer to use the
seller’s name, licenses, and permits.
• Provides continuity of corporate identity,
contracts, and structure.
• There is less flexibility to cherry-pick key
assets of the seller.
• This structure usually does not terminate
existing labor union collective bargaining
agreement(s) and generally results in the
continuation of employee benefits plans.
• The seller is taxed only on the sales of stock.
• Any gain or loss is usually capital in nature.
• It does not leave the seller with the problem of
disposing of assets that were not bought by
the purchaser.
• The seller cannot pick and choose the assets
to be retained.
• A loss on the sale of stock may not be
recognized by a corporate shareholder who
included the company in its consolidated
income tax return.
Seller’s perspective
38. In the next slides, you’ll see a small preview of Phase VI of our M&A
approach
38
II. Identify Target
Companies
III. Build a Business
Case and an M&A
Financial Model
IV. Conduct Due
Diligence
V. Execute
Transaction
VI. Conduct the Post
Merger Integration
I. Define your M&A
Strategy
1. Company mission,
vision and values
2. M&A strategic
objectives and key
performance
indicators
3. M&A team
4. M&A guiding
principles
5. Target screening
criteria
1. Post merger integration
strategy & high-level plan:
Strategic objectives,
integration management
office, guiding principles,
high-level plan,
organizational structure,
top management
appointment, synergies,
integration & synergy
initiatives, business cases
and financial models
2. Post merger integration
detailed plans: Detailed
integration plan including
the day 1 readiness
checklist, integration &
synergy initiatives plan, etc.
3. Implementation and
monitoring
1. Potential target
companies and data
collection
2. High-level
assessment of
potential target
companies
3. Shortlisted potential
targets
4. Financial statements
analysis
5. Valuation: DCF
model, comparable
company analysis,
and precedent
transaction analysis
6. Targets approved for
the business case
phase
1. Work plan including
key business case
hypotheses &
assumptions
2. Due diligence to
validate key
hypotheses and
assumptions
3. Updated business
valuation
4. Recommendation to
make (or not) a
formal offer to
acquire the target
company
1. Deal structure
2. M&A negotiations
3. Signing and closing
the M&A deal
1. Strategic benefit
2. Feasibility
3. Financial benefit
4. Comprehensive M&A
financial model
including acquirer
model, target model,
merger assumptions
& analysis, and pro
forma model
5. Simple Financial
model including
integration cost,
revenue synergy,
cost synergy, NPV,
ROI, and IRR
6. Letter of intent or
term sheet
39. 3-phase approach
The Post Merger Integration Toolkit includes a 3-phase approach that we have built and refined over the past 20 years through
constant trial and error. The good news is that you don’t have to waste your time, energy, and money going through that lengthy
trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization.
39
Phase I: Define & Communicate the
Strategy & High-Level Plan
Phase II: Develop & Communicate the
Detailed Plans
Phase III: Implement & Monitor
1. Merger strategic objectives
2. Integration management office
3. Guiding principles
4. Post merger integration high-level plan
5. Organizational structure (Top layers)
6. Top management appointment
7. Training to help managers set up their team
8. Integrated synergy baseline
9. Synergy targets
10.Potential integration & synergy initiatives
11.Business cases and financial models
12.Integration & synergy initiatives prioritization
1. Status of the post-merger integration high-level plan
2. Status of the detailed integration plan
3. Status of the integration and synergy initiatives plan
4. Status of the change management strategy and plan
5. Status of the communication strategy and plan
6. Status of the culture integration strategy and plan
7. Status of the risk management strategy and plan
8. Status of staffing and the retention plan
9. Integration lessons learned
10. Institutionalization of the updated PMI Toolkit
1. Detailed integration plan including the Day 1
readiness checklist
2. Integration & synergy initiatives plan
3. Change management strategy and plan
4. Communication strategy and plan
5. Culture integration strategy and plan
6. Risk management strategy and plan
7. Staffing & retention plan
40. In the next slides, you’ll see a small preview of Phase I
40
Phase I: Define & Communicate the
Strategy & High-Level Plan
Phase II: Develop & Communicate the
Detailed Plans
Phase III: Implement & Monitor
1. Merger strategic objectives
2. Integration management office
3. Guiding principles
4. Post merger integration high-level plan
5. Organizational structure (Top layers)
6. Top management appointment
7. Training to help managers set up their team
8. Integrated synergy baseline
9. Synergy targets
10.Potential integration & synergy initiatives
11.Business cases and financial models
12.Integration & synergy initiatives prioritization
1. Status of the post-merger integration high-level plan
2. Status of the detailed integration plan
3. Status of the integration and synergy initiatives plan
4. Status of the change management strategy and plan
5. Status of the communication strategy and plan
6. Status of the culture integration strategy and plan
7. Status of the risk management strategy and plan
8. Status of staffing and the retention plan
9. Integration lessons learned
10. Institutionalization of the updated PMI Toolkit
1. Detailed integration plan including the Day 1
readiness checklist
2. Integration & synergy initiatives plan
3. Change management strategy and plan
4. Communication strategy and plan
5. Culture integration strategy and plan
6. Risk management strategy and plan
7. Staffing & retention plan
41. The strategic objectives of our merger are:
41
1 Replace this text with your own text
2 Replace this text with your own text
3 Replace this text with your own text
4 Replace this text with your own text
5 Replace this text with your own text
6 Replace this text with your own text
Don’t reinvent the wheel here. Most
of the strategic objectives should
have already been written prior to the
deal.
42. The most common strategic objectives of mergers are:
42
1 Gaining economies of scale
2 Entering a new country
3 Entering a new market
4 Increasing the company’s product or service portfolio
5 Increasing market share by acquiring one of your competitors (horizontal integration)
6 Becoming a key player in an industry by acquiring one of your suppliers or clients (vertical
integration)
Example we used during a PMI
consulting project we did for a Global
Fortune 1000 firm.
43. We decided to create an Integration Management Office that will be
responsible for the success of the integration
43
The Integration Management Office will oversee the post Merger Integration and be responsible for its success. It
includes 7 [replace this number with your own number] executives representing both [insert name of the acquiring
company] and [insert name of the acquired company]:
Integration Management
Officer
[Insert name]
Integration and
Synergy Initiatives
[Insert name]
Change
Management
[Insert name]
Culture
[Insert name]
Risk Management
[Insert name]
Communication
[Insert name]
Training
[Insert name]
This is only an example. You may
decide to emphasize different areas
and adjust the size of the integration
Management Office.
44. See below 4 screenshots from Phase I.
44
High-Level Plan
Prioritization Matrix
Lean Business Case
Synergy Target Breakdown
45. In the next slides, you’ll see a small preview of Phase II.
45
Phase I: Define & Communicate the
Strategy & High-Level Plan
Phase II: Develop & Communicate the
Detailed Plans
Phase III: Implement & Monitor
1. Merger strategic objectives
2. Integration management office
3. Guiding principles
4. Post merger integration high-level plan
5. Organizational structure (Top layers)
6. Top management appointment
7. Training to help managers set up their team
8. Integrated synergy baseline
9. Synergy targets
10.Potential integration & synergy initiatives
11.Business cases and financial models
12.Integration & synergy initiatives prioritization
1. Status of the post-merger integration high-level plan
2. Status of the detailed integration plan
3. Status of the integration and synergy initiatives plan
4. Status of the change management strategy and plan
5. Status of the communication strategy and plan
6. Status of the culture integration strategy and plan
7. Status of the risk management strategy and plan
8. Status of staffing and the retention plan
9. Integration lessons learned
10. Institutionalization of the updated PMI Toolkit
1. Detailed integration plan including the Day 1
readiness checklist
2. Integration & synergy initiatives plan
3. Change management strategy and plan
4. Communication strategy and plan
5. Culture integration strategy and plan
6. Risk management strategy and plan
7. Staffing & retention plan
46. Detailed integration plan including the Day 1 readiness checklist
46
Open the Excel document “Detailed Integration Plan” to see
the 300+ activities listed in the plan
47. See below 4 additional screenshots from Phase II.
47
Change Impact Assessment Matrix
Stakeholder Analysis Matrix
Communication Strategy & Plan
Culture Integration Strategy
48. In the next slides, you’ll see a small preview of Phase III.
48
Phase I: Define & Communicate the
Strategy & High-Level Plan
Phase II: Develop & Communicate the
Detailed Plans
Phase III: Implement & Monitor
1. Merger strategic objectives
2. Integration management office
3. Guiding principles
4. Post merger integration high-level plan
5. Organizational structure (Top layers)
6. Top management appointment
7. Training to help managers set up their team
8. Integrated synergy baseline
9. Synergy targets
10.Potential integration & synergy initiatives
11.Business cases and financial models
12.Integration & synergy initiatives prioritization
1. Status of the post-merger integration high-level plan
2. Status of the detailed integration plan
3. Status of the integration and synergy initiatives plan
4. Status of the change management strategy and plan
5. Status of the communication strategy and plan
6. Status of the culture integration strategy and plan
7. Status of the risk management strategy and plan
8. Status of staffing and the retention plan
9. Integration lessons learned
10. Institutionalization of the updated PMI Toolkit
1. Detailed integration plan including the Day 1
readiness checklist
2. Integration & synergy initiatives plan
3. Change management strategy and plan
4. Communication strategy and plan
5. Culture integration strategy and plan
6. Risk management strategy and plan
7. Staffing & retention plan
49. See below 4 additional screenshots from Phase III.
49
Governance
Risk Management Framework
Initiative Status Report
Communication Plan
50. Structure of the Toolkit
The M&A Toolkit includes 600 Powerpoint slides, 65 Excel sheets, 7 Word pages and 37 minutes of Video
training organized in 7 folders that you can download on your device immediately after your purchase.
50
*Please note that the number of PowerPoint slides and Excel sheets listed is the number of unique slides and sheets. For example, a PowerPoint slide
that has been duplicated to facilitate our clients’ understanding only counts for 1 slide.
0. Overview and
Approach
I. M&A Strategy II. Target companies III. Business Case
and Financial Model
IV. Due
Diligence
VI. Post Merger
Integration
V. Transaction
Execution
600 editable
Powerpoint slides*
65 editable Excel
sheets*
+
7 editable Word
pages
+
37 minutes of
Video training
+
51. Key Benefits of our Management Consulting Toolkits
51
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