Оглавление
Paul Pignataro. Mergers, Acquisitions, Divestitures, and Other Restructurings
Preface
The Office Depot and OfficeMax Merger Case Study
How This Book Is Structured
Part One. Introduction
Chapter 1. Merger and Acquisitions Overview
The M&A Process
Office Depot and OfficeMax
Chapter 2. Financial Statements Refresher
The Income Statement
The Cash Flow Statement
The Balance Sheet
Depreciation
Working Capital
Debt Schedule
Financial Statement Flows Example
Part Two. M&A Analyses
Chapter 3. Raising Debt and Equity
Raising Debt
Raising Equity
Chapter 4. Asset Acquisitions and Asset Divestitures
Asset Acquisitions
Asset Divestitures
Chapter 5. Accretion/Dilution Analysis
Step 1: Obtaining a Purchase Price
Step 2: Estimating Sources and Uses of Funds
Step 3: Creating a Pro-Forma Analysis
Summary
Drivers
Part Three. Office Depot/OfficeMax Merger
Chapter 6. Assumptions
Uses of Funds
Sources of Funds
Chapter 7. Income Statement
Pro-Forma Income Statement
Chapter 8. Cash Flow Statement
Cash Flow from Operating Activities
Chapter 9. Balance Sheet Adjustments
The Buyer Is Paying For
The Buyer Is Receiving
Additional Adjustments
Office Depot and OfficeMax Balance Sheet Adjustments
Chapter 10. Depreciation Schedule
Straight-Line Depreciation
Chapter 11. Operating Working Capital
Receivables
Inventories
Prepaid Expenses and Other Current Assets
Deferred Income Taxes and Receivables
Trade Accounts Payable, Accrued Expenses, and Other Accrued Liabilities
Income Tax Payable
Other Current Liabilities
Projecting Operating Working Capital
Operating Working Capital and the Cash Flow Statement
Chapter 12. Balance Sheet Projections
Cash Flow Drives Balance Sheet versus Balance Sheet Drives Cash Flow
Balancing an Unbalanced Balance Sheet
Chapter 13. Debt Schedule and Circular References
Debt Schedule Structure
Modeling the Debt Schedule
Circular References
Automatic Debt Paydowns
Basic Switches
Chapter 14. Accretion/Dilution
Fairness Opinions
Preferred Shares
Contribution Analysis
Conclusion
Appendixes
Appendix 1. Model Quick Steps
Appendix 2. Financial Statement Flows
Income Statement to Cash Flow
Cash Flow to Balance Sheet
Appendix 3. Excel Hot Keys
About the Companion Website
About the Author
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Mergers, acquisitions, divestitures, and other restructurings (M&A) have arguably existed as long as the history of business. The processes of merging, purchasing, divesting entities or assets, and restructuring businesses are all major methods of providing growth and value to both large and small corporations alike. The Wall Street–coveted analysis of understanding the drivers leading to growth through M&A has remained somewhat of a mystery to the public, until now.
Although M&A activity has its origins arguably with the dawn of commerce, M&A as a greater business strategic phenomenon began in the nineteenth century in a period known as “The Great Merger Movement.” It was at this time that very small businesses were consolidated into large public entities that dominated the markets. Companies like U.S. Steel, International Paper, and Standard Oil created near-monopolistic entities. Today M&A has evolved and changed with regulation, market, and industry. Despite the details of its evolution and progress, M&A still proves to be a key driver for business growth.
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Part Two will step through the process of an equity raise, a debt raise, a simple asset acquisition, an asset divestiture, and an accretion/dilution analysis. In each analysis we will illustrate the concepts and model example situations. These high-level analyses help us to understand the importance of key variables and are crucial to understanding how various assumption drivers affect potential results. The understanding of these analyses will help conceptualize the mechanics of a fully integrated merger, which will be detailed in Part Three.
In Part Three, we build a complete merger model of Office Depot and OfficeMax. We utilize the companies' historical performance and step through techniques to make accurate projections of the business's future combined performance. The goal of this part is not only to understand how to build a fully integrated merger model but also to understand the merger integration concepts to best interpret the merger results, understand how various drivers affect the analysis, and be able to create a transactional model based on any unique situation.
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