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4-6 - David Carroll Post Merger IntegrationNotes on PMI for...

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4-6-2011 David Carroll: Post Merger Integration— Notes on PMI for Reading In M&A, must consider process AND human element: value of human interaction (must have a relationship unless doing a hostile takeover) Why do M&A? o Scarcity (e.g. big run-up in commodity prices like copper or steel) o New products, new technology o Accounting can be favorable (purchase accounting can let you mark assets at market value o Strategic acquisition—same industry to take advantage of expense efficiencies o Financial acquisition—financially engineer a better return (e.g. KKR PE firm levers up companies because that increase returns o Product extension (pharmaceuticals) o Geographic extension (Wells Fargo and Wachovia) Due diligence 1. validate economic model and have confidence in your assumptions o After access to information, check underlying economic assumptions and POV on industry o Decompose the company: pair off with counterparts to find out how they work
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