Company Information STEP 1

We begin our M&A model by plugging into the spreadsheet some basic market data and corporate information about the target ("TargetCo") and acquirer ("BuyerCo"). Market data can be obtained from a number of sources, including FactSet, CapitalIQ, Google Finance, Reuters, and Bloomberg. Most corporate information can be found in SEC filings available online at the EDGAR database. Some things to keep in mind:

  • Make sure that the 52-week highs/lows are closing prices, not intraday trading prices.
  • Basic shares outstanding should be the most recent figure available, from the latest 10-Q, 8-K, or other source, and should be adjusted for any transactions that would affect these figures (e.g. stock acquisitions) since they were last reported.
  • Stock options and convertible securities details are usually found in the most recent 10-K, but can sometimes be found in the latest 10-Q.
  • The LTM date is the ending date of the last fiscal quarter for which an 8-K earnings release or 10-Q/K is available. For example, if the last fiscal quarter ended June 30, but earnings have not been reported for that quarter, the LTM date is March 31.
  • When inputting options data, be sure to use options outstanding rather than options exercisable. Options usually vest automatically upon a change in control.

sample options table
Sample options table taken from Intel's 2008 10-K.

Note that we have specified which analyst research reports we are using for financial projections. When selecting a single research report, be sure that its key estimates (e.g. sales, EBITDA, EBIT, etc.) track consistently with Wall Street consensus and that ample detail 2-3 years forward is provided. Using individual research reports–rather than consensus–and citing your sources makes it easy for others to check your work.

It is good practice to color-code cells in your spreadsheet. In general, inputs are colored blue, calculated cells are colored black, and cells that link to other worksheets are colored green. Red may be used to identify cells that require special attention, but are not used to denote negative numbers.

Have a look at the current share price cells and you'll notice that we named them "acq_price" and "tgt_price". Naming cells is a good practice that allows us to more quickly reference them when building other worksheets in our model, and lets users know, at a glance, which cells an equation references. Open Excel's Define Name dialog box (Alt>i>n>d) to define names for cells that are used frequently throughout your model.