Class 24 MA BSBA 2011 Acq Process

Class 24 MA BSBA 2011 Acq Process - BSBA599 – Mergers&...

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Unformatted text preview: BSBA599 – Mergers & Acquisitions Spring 2011 1 Prof. David Ravenscraft Kenan-Flagler Business School University of North Carolina Session 24: Parking lot and other topics Three Key Steps to Succeeding in M&A STRATEGY - DOES THE MERGER CREATE VALUE? DEAL PROCESS- CAN THE BIDDER CAPTURE THE VALUE? HOW TO PREVENT POST-MERGER INTEGRATION PROBLEMS FROM DESTROYING THE VALUE? 3 Acquisition Process STRATEGY - DOES THE MERGER CREATE VALUE? DEAL PROCESS- CAN THE BIDDER CAPTURE THE VALUE? HOW TO PREVENT INTEGRATION PROBLEMS FROM DESTROYING VALUE?-Strategic Planning Corp. Level Strategy Industry Analysis Acq. Strat. (Synergy) Merger Environment Stock Market Eval. -Origination or Sourcing Target Initiated (IB)-Pre-valuation analysis-Financing Decision-Tax & Accounting -Antitrust & Regulation -Initial Contact-Confidentiality Agreement-Prelim Due Diligence-Detailed Valuation -Deal Approval Pitch-Letter of Intent-Extensive Due Diligence-Starts with Due Diligence-Integration Manager & Teams-Integration Plan- Integration Speed, Autonomy, Assimilation-Focus on Problem Solving General Advice on Target Selection Steps to the target ID Process 1. Select criteria to rank segments and firms in best segment. Make sure criteria reflect bidders strategy and strengths, not targets. 2. Clearly define the segments that are attractive to your business (product and geography) 3. Select the best entry option (build, buy, JV) 4. If buy, identify and collect data on all existing and new players in the industry 5. Narrow your list to a few attractive targets in the attractive segments 6. Research these targets and select the best to approach 7. Make contact 8. Determine how the acquisition process will occur . . . develop strategy to influence process path 9. While the process focuses on the best candidate, you should also be developing a list of potential candidates Electronic Warfare $ Size Growth/trend Technology/IP Top 5 Concentration Attractiveness Metric Airborne/Space EO Land & Sea-based EO Airborne Radar Surface Radar Surface Communication Airborne Communication Segment = Highly Attractive = Attractive = Unattractive Within Defense Electronics, the EO Segment is most attractive 63% 58% 79% 98% 81% 74% 71% important Cutting edge Cutting edge Less influential Less influential important important 5% 5% 3% 7% 1%-2% 0% $1.4 B $1.9 B $0.14B $1.5 B $1.1B $1.1 B $1.5 B Segment Evaluation on a relative basis: Example - Defense Electronics Identify and evaluate all players in the industry Target Identification & Approach Proactive BD teams build databases of targets and track events . . . Often far in advance of acquisition candidate becoming available . . . • Many sources are available to identify / investigate candidates: – sales leaders: who is winning in the market place?...
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This note was uploaded on 02/13/2012 for the course BUSI 599 taught by Professor Ravenscraft during the Fall '10 term at UNC.

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Class 24 MA BSBA 2011 Acq Process - BSBA599 – Mergers&...

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