M&A – Top Considerations and Implications In M&A transactions, there are several important factors that executives, investment bankers, and other stakeholders have to consider, including: Form of consideration (cash vs. shares) Accounting implications Tax treatment Synergies Strategic rationale Intangibles 1. Form of consideration for the M&A deal In order for a company to consider a…
M&A document retention policy After closing an M&A process, the Managing Director responsible for the bank’s participation in the transaction and/or the client relationship should instruct a member of the deal team to assemble the documents to ensure that a complete record of the transaction is created and retained. Each document should be reviewed to…
What is Discounted Cash Flow DCF analysis? Discounted cash flow DCF analysis determines the present value of a company or asset based on the value of money it can make in the future. The assumption is that the company or asset is expected to generate cash flows in this time frame. In other words, the…
What is a Free Cash Flow? Free cash flow (FCF) measures a company’s financial performance. It shows the cash that a company can produce after deducting the purchase of assets such as property, equipment, and other major investments from its operating cash flow. In other words, FCF measures a company’s ability to produce what investors…
What are Proforma Earnings per Share (EPS)? Proforma earnings per share (EPS) is the calculation of EPS assuming a merger and acquisition (M&A) takes place and all financial metrics, as well as the number of shares outstanding, are updated to reflect the transaction. “Pro forma” in Latin means “for the sake of form.” In this…
What is a Type A Reorganization? Type A reorganization is a “statutory merger or consolidation.” These are mergers or consolidations effected pursuant to state corporate law. A merger is a union of two or more corporations. One corporation retains its existence and absorbs the others. On the other hand, a consolidation occurs when a new corporation…
What is a Tax-Free Reorganization? A corporation may undergo restructuring or reorganization for various strategic reasons, such as increasing operational efficiency or reducing costs. The reorganization may be conducted to increase profits. A tax-free reorganization is often implemented to identify efficiencies within the law that allow for reduced tax liability. Such types of reorganizations can…
What is a Leveraged Recapitalization? A leveraged recapitalization involves changing the capital structure of a company by increasing debt and reducing equity. This means a corporation will borrow money (i.e., issue bonds) to generate cash proceeds, which will then be used to repurchase previously issued shares and reduce the proportion of equity in the company’s…
What is Equity Carve-Out? Through the process of an Equity Carve-Out, a company tactically separates a subsidiary from its parent as a standalone company. The new organization is complete with its own board of directors and financial statements. The parent company usually retains its controlling interest in the new company. It also offers strategic support…
What is an Investment Banking Pitch Book? An investment banking pitch book is a PowerPoint presentation designed to win new business. The “pitch” is typically an explanation of why the bank in question is best suited to lead the transaction and why they should be engaged by the client. There are various types of pitches,…
