Mergers, Acquisitions and Corporate Restructuring Notes
Subject Overview
The fourth Finance group elective, covering the motives and forms of mergers, acquisitions and corporate restructuring, demergers/
Subject at a glance
4
Units
25
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Evolution
- need and motives for mergers and acquisitions
- forms of corporate restructuring
- M&A as strategic choice
- evaluation of strategic alternatives
- value creation
- takeover defence strategies
- reasons for M&A failures
Horizontal
Competitors in the same industry
Market share, scale
Vertical
Firms at different supply chain stages
Control supply or distribution
Conglomerate
Unrelated businesses
Diversification
Concentric
Related products or technology
Cross-selling, shared skills
Study guide
This unit covers the evolution, need and motives of M&A, forms of restructuring, M&A as strategy, value creation and takeover defences. List the motives of a recent merger.
- Demerger
- reverse merger and buyback of shares
- strategic alliance types and structure
- LBO characteristics and financing
- restructuring of sick companies
- deal valuation factors and basics
- valuation of intangibles
Demerger
Split a business into a new company
Reverse merger
Private firm merges into a listed one
Buy-back
Company repurchases its shares
LBO
Acquisition funded mainly by debt
Strategic alliance
Cooperation without merging
Study guide
You study demergers, reverse mergers, buybacks, strategic alliances, LBOs, restructuring sick companies, deal valuation and valuation of intangibles. Understand how an LBO is financed.
- Methods of payment and financing options
- impact on EPS
- determinants of M&A financing decisions
- accounting aspects
- impact on shareholder wealth
Exchange ratio
Shares offered per target share = target price / acquirer price
Post-merger EPS
(Combined earnings) / (acquirer shares + new shares issued)
Synergy
Value of combined firm − (value A + value B)
Acquisition premium
(Offer price − pre-bid price) / pre-bid price
Study guide
You study payment methods, financing options, impact on EPS, financing determinants, accounting aspects and shareholder wealth effects. Compute EPS before and after a stock deal.
- Tax implications of M&A
- the integration process
- international M&A motivations and strategies
- due diligence
- regulatory aspects of M&A
- 1
Strategy and target screening
- 2
Valuation
- 3
Negotiation and term sheet
- 4
Due diligence
Financial, legal, tax, HR
- 5
Regulatory approvals
CCI, SEBI, NCLT
- 6
Closing and integration
Study guide
You study tax implications, integration, international M&A, due diligence and regulatory aspects. Learn what due diligence covers.
Why Mergers, Acquisitions and Corporate Restructuring Matters
M&A is a prestigious area of finance and strategy, with roles in investment banking, consulting and corporate development.
How to Prepare for Mergers, Acquisitions and Corporate Restructuring
- Follow recent deals and analyse their rationale and outcome.
- Practise valuation and EPS calculations.
- Learn the stages of an M&A transaction.
Mergers, Acquisitions and Corporate Restructuring: Frequently Asked Questions
What is due diligence?
Due diligence is a detailed investigation of a target company's finances, legal position and operations before a deal.