Merger Model

In this section, we demonstrate how to model a merger of two public companies in Excel. Each topic contains a spreadsheet with which you can interact within...

We begin our M&A model by plugging into the spreadsheet some basic market data and corporate information about the target ("TargetCo") and acquirer...

Let's now turn our attention to computing the enterprise values of the target and acquirer. To do so, we first need to calculate the number of fully diluted...

When building a model, it is important that the model be flexible enough to consider a wide range of possible scenarios. Let's now add some assumptions...

The first step in our merger analysis is to model BuyerCo's income statement to include historical results and projections. When sufficient data is available,...

Our next step is to reconcile our "cash" net income and EPS figures to the "GAAP" figures reported by BuyerCo in its public company filings. We do this...

Now that we have put together the BuyerCo's historical income statement, let's focus on projecting the income statement into the future. If the company...

Of course, we would like to project the income statement more than three years out. Since Wall Street equity research analysts typically project just one...

We create TargetCo's P&L in nearly the exact same way that we put together BuyerCo's P&L, so we'll skip the intermediate steps and go straight to the final...

In this step we simply recreate the target's and acquirer's balance sheets using public company filings (e.g. 10-Ks, 10-Qs, or 8-Ks) from the last twelve-month...

Our next step is to begin the purchase price ratio analysis ("PPR"). This analysis will show us what premiums and multiples the acquirer would be paying...

The next step in the purchase price ratio analysis is to calculate the premium (or discount) each transaction price represents relative to various historical...