Back to Basics | Mergers & AcquisitionsJune 13, 2013
This is the classic investment banking product offering and involves providing advice to businesses, private investors, government agencies, private individuals and families in divesting and acquiring assets. Advice is provided on a full range of transactions including mergers, sales, buyouts, divestments, leveraged buyouts, joint ventures, raid defenses, spin-offs.
The range of services includes origination of assets to acquire, structuring, negotiation, due diligence right up to documentation and closure. The banker or a team of bankers work side by side with the company often even in charting out their growth strategy before they decide to pursue inorganic growth.
Large bulge bracket M&A teams in Goldman Sachs, JP Morgan etc often have two parts to their business- Origination & Execution. Origination involves the sourcing of deals, which includes business environment analysis, company research, pitching and agreeing on terms. Once a deal has been sourced and the target/strategy agreed on the execution team steps in to validate, value, structure and close.
To understand how interconnected the entire spectrum of banking is, we will use the example of Company ABC. ABC is bottling Water Company undertaking a huge organic and inorganic expansion plan. This strategy in itself might have been formulated with the help of a consultancy firm like McKinsey or Monitor. Once a strategy has been formulated, ABC retains an M&A team to chart out its inorganic strategy and put out a criteria list. The M&A team will then scout the globe and bring back a laundry list of possible matches according to the criteria list. They shortlist and start contacting the companies, or their respective bankers and after a lengthy process of sharing preliminary information, they zoom in on XYZ Water Company to be a suitable strategic asset for ABC. The M&A team will now engage, value, and handle the entire transaction on behalf of its client from here on out till closure. Closure includes signing on the dotted line and the fulfillment of conditions precedent (Essentially terms that need to be fulfilled for money and shares to exchange hands) Lawyers play a significant role in M&A as well and work in tandem with the M&A team especially in Due Diligence and Documentation.
This brings us to our IFAP course why it is different from other Financial Analyst Courses. Our IFAP course covers this entire process in detail and will equip you with the tools required to understand and run this process effectively. We will teach you how to research companies, how to value them and use financial models in an M&A transaction. We will take you through the concept of synergy and control premiums. Finally we will take you through the salient points of documentation.