Why the company should be acquired and what purchase price should be paid

Project requirements

Pick a target company that you as a company like to merge with. (Mostly the analysis on Target Company ) for example you are bank of America and you want to buy (bank of Florida which this will be your target).

           

Locate a publicly traded company in an industry that interests you.  Find a publicly traded competitor which is suitable for a merger or acquisition with this firm.

Write a (10-15) pages double spaced paper (not including exhibits) on why the company should be acquired and what purchase price should be paid.  Your analysis should include the “real” reasons behind the merger and not the standard answers.  Major topics should include:  A brief background of the industry which the company operates, a background on the company and the management team, the acquisition purchase price (you may want to include a base purchase price and the maximum purchase price your firm would be willing to pay), what makes this merger a good fit, a brief strategy on how the company will operate after the merger, and how the deal would be financed.( the analysis should be for the target company).

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You have an enormous amount of material to use for this project.  Annual Reports and 10Ks can be obtained by contacting the company’s Investor Services Department. 

Prepare your presentation as though it was before the Board of Directors of the company.  The class will be asking specific questions about your analysis, so be prepared.

Try to stay away from Airlines Companies and banks, since it’s a bit hard to analyze.

Describe how the target company fits does and operates within the industry. (Important point)

Explain and show how you came up with the bid price and why.

Calculate NPV (Make sure it is right and it is not a negative number, if so maybe you will have a problem with your working capital which is calculated by account payable, account receivable, inventory) ( make sure when  you calculate your WC its incremental not total) show what this number means and what it will do, also IRR,,, and other important calculations.

Make sure your calculation (your model and financial statements and right and cash flow forecasting), and focus on your calculation when you do AccretiveDilutive.

Valuations and recommendation, and show why you should confines people to invest in your idea of merge.

Don’t forget to focus on equity of dept.

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