Documentos de Académico
Documentos de Profesional
Documentos de Cultura
20 September 2005
Agenda
Description
Types of M&A
One crucial factor in determining the value of M&A synergies is the acquiror’s
ability in extracting value from its own and the target’s resources, which
depends on the type of M&A:
บริษัท Horizontal integration Vertical integration Functional integration
Acquiror
Corporate Concerned more with preserving ‘status quo’ corporate culture than nurturing a more
culture appropriate culture post-acquisition.
Organization Did not encourage employees to participate in organizational changes, both pre- and post-M&A
al change Did not promote important organizational changes.
Did not encourage employees to change work habits, or voice constructive criticisms or
Leadership
suggestions post-M&A.
Could not realize the full extent of cost savings envisioned pre-acquisition, due to insufficient
Post-merger
planning that should include methods to effectively leverage/pool resources of combined firms.
integration
Ineffectual post-merger integration that disrupts normal business operations.
Other issues
Time-consuming: a special License agreements and other Acquiror must bear both
shareholder resolution is rights are not automatically rights and obligations of
required, and both companies transferred with assets. target, including lawsuits and
must wait 6 months for Potentially significant tax contingent liabilities that may
dissenting lenders. burden for acquiror. be difficult to audit.
Cons New entity must bear If acquiror lacks the know- Selling shareholders may be
liabilities and obligations of how to extract value from subject to capital gains tax.
acquiror and target. assets, buying assets alone Must use purchase
Both acquiror and target must may yield sub-optimal accounting: negative P&L
dissolve. results. impact from goodwill.
approx. 2 months approx. 1 month 2.5 mths – 1 yr* approx. 5-10 mths.
* depending on M&A method used: from 2.5 months in case of share acquisition, to 1 year or longer in case of
full merger
FA = Financial Advisor
Valuation
For M&A driven by business rationale, 3 common valuation methods are used:
Precedent transaction
Trading comparables Discounted cash flow
comparables
Value target based on trading Value target as the present Value target based on
multiples of listed firms in the value of expected future cash acquisition premiums and
same industry, e.g. P/E, P/BV, flows, discounted by cost of transaction multiples paid by
P/Sales, EV/EBITDA capital acquirors for previous
An in-depth analysis based on a transactions in the same
financial model built on results industry
from financial due diligence
Trading multiples
Precedent transactions
Value
For M&A driven by undervalued assets, value of assets can be assessed using
methods such as liquidation/salvage value, replacement costs, etc.
Stock Exchange of Thailand 17