Day 10 - M&A Accounting, Analysis and Modeling Fundamentals

Day 10 a.m. - M&A Accounting

During this session participants learn the accounting rules to incorporate equity investments in the consolidated accounts and work on several examples by preparing proforma financials for a variety of cases. Complexities such as noncontrolling interests and equity method investments (associates/affiliates), and their impact on earnings and cash flows are also covered.

Key topics:

• Accounting rules for equity investments
  • ­Fair value through profit and loss investments
  • ­Available for sale investments
  • ­Equity method investments (associates/affiliates)
  • ­Proportional consolidation
  • ­Full consolidation
  • ­Noncontrolling interest
• Consolidation of balance sheet and income statement
• Impact of an M&A transaction on earnings
• Goodwill calculations
• Goodwill impairment test
• The impact of deal financing

Day 10 p.m. - M&A Analysis and Modeling Fundamentals

This session covers the basic steps of analyzing an acquisition – covering the impact of a deal on the financial statements with a particular focus on EPS, PE and contribution analysis. The M&A module starts by looking at how to estimate the accretion/dilution from an acquisition using equity and debt PE multiples. The next step is to build an accretion and dilution model using EPS forecasts and acquisition assumptions, proforma leverage ratios and a proforma balance sheet.

Key topics

• Big picture: what is the transaction impact on acquirer and target shareholders?
• Preparing key acquisition data
• Building a flexible funding structure
• Modeling acquisition adjustments
• Calculating the accretion/dilution effects of the deal
• Understanding the significance of relative P/Es
• Calculating and understanding contribution analysis
• Ownership issues
• Income statement contribution
• Credit issues and leverage ratios
• The strategic implication of different financing alternatives
• Synergies and synergies needed to break even
• Proforma balance sheet
• Sensitivity and scenario analysis