- Automotive Business
- Balance Sheet
- Bank Financial Models
- Black-Scholes -
- Cash Burn Rates
- Cash Flow
- Comparable Comps Analysis
- Corporate Finance
- Cost Analysis
- Debt Schedule
- Discounted Cash Flow (DCF)
- Economic Value Added
- Excel Add-Ins
- Financial Markets
- Financial Projections -
- Hedge Fund
- Healthcare Financials
- Hotel Financial Models
- Income Statement
- Industry Specific Financial Models
- Investment Banking
- Inventory Management
- IPO (Initial Public Offering)
- IT (Information Technology) Business
- Leveraged Buyout (LBO)
- Mergers & Acquisitions (M&A)
- ModelOff Samples
- Monte Carlo Simulation
- Mining Financials
- Net Present Value (NPV)
- Options Pricing & Valuation
- Personal Finance
- Private Equity
- Real Estate Finance
- Renewable Energy Financials
- Restaurant Finance
- Return On Investment (ROI)
- Retail Finance
- Shipping Financials
- Scenario Analysis
- Sensitivity Analysis
- Stock Valuation
- Three Statement Financial Models
- Valuation Models
- Venture Capital
- Weighted Average Cost Of Capital (WACC)
- Wealth Management
- Cohort Analysis
- Design Thinking Process
- E-Commerce Financial Models
- Growth Hacking
- Lean Startup
- Lifetime Value (LTV)
- Raising Capital
- Software-as-a-Service (SaaS)
- Startup Boards
- Startup Business Plans
- Startup Cap Tables
- Startup Financial Models
- Startup Investors
- Startup KPI Dashboards
- Startup Lifestyle
- Startup Pitch Decks
- Startup Studios
- Startup Valuation
- Legal & HR
Mergers & Acquisitions (M&A) models
What is 'Mergers and Acquisitions' (M&A)
Consolidating companies or assets is generally referred to as ‘Mergers and Acquisitions.’ It is kind of an umbrella term for a range of transactions, such as mergers or acquisitions (obviously), asset purchases, tender offers, and management acquisitions. Every single case involves two companies. ‘M&A’ as a term also refers to the department with a financial company that deals with all mergers and acquisitions.
Breaking Down Mergers & Acquisitions
As aforementioned, ‘M&A’ can include various transactions. These are:
Merger: The result of this is the elimination of one company as it becomes a part of another company. This happens after the Boards of Directors of each company approve the combination of the two companies and seek the shareholders’ approval. You could also think of it like an ‘absorption’ of one company by another.
Acquisition: In this case, the acquiring company will obtain the majority stake of another firm. The acquired firm will keep its own name and legal structure.
Consolidation: The result of this transaction is the creation of a brand new company. It is necessary that each company’s stakeholders approve the consolidation, and once this is done, they will receive common equity shares in the newly created firm.
Tender Offer: Here, one company buys the outstanding stock of another company at a set price. The offer is communicated directly to the target company’s shareholders, without prior agreement from the management or board of directors. The acquiring company may still exist after the transaction, however the majority of tender offers end up becoming mergers.
Acquisition of Assets: When a company buys another company’s assets, it acquires them from that company. The approval of shareholders must be obtained before the company’s assets can be acquired. This is common in cases of bankruptcy, where other firms will aim to buy the assets of a bankrupt company during a bid. The bankrupt company will be liquidated when all of their assets have been acquired.
Management Acquisition: This refers to when a company’s executives buy a controlling stake of another company, enabling it to become private. It is common that these former executives will form a partnership with former corporate officers or a financier to aid the funding of the transaction. This type of transaction will usually be financed partly with debt, and it’s necessary that it is approved by the majority of shareholders.
What's the Difference Between a Merger and an Acquisition?
A merger is when two separate companies, generally of a similar size, will come together to create a new company in which both entities will become equal partners.
An acquisition is when one company buys another separate company. This is generally a bigger company buying a smaller company. Unlike a merger, a new company is not formed by this type of acquisition. Rather, the acquired company will cease to exist, and the acquiring company will take over its assets. If the target firm resists being taken over, there can be very negative connotations surrounding the deal, often instead referred to as a ‘takeover.’ Because of this, even if two companies are going through an acquisition, they’ll refer to it as a merger to avoid any negative press.
In legal terms, for a merger to take place, you need two companies that will consolidate into a new legal entity with a new management structure and new ownership. For an acquisition to take place, one company will take over all managerial operational decisions of another company.
Realistically, it is uncommon that friendly ‘mergers of equals’ take place in which two companies will come together to create a new, better company. Generally, the benefit isn’t clear, and the CEOs are rarely 100% keen on sacrificing authority to realize potential benefits. However when it does take place, both companies surrender stocks and new stocks will be issued under the identity of the new business.
Because mergers aren’t common and takeovers are surrounded by negative connotations, the two terms have become more and more combined and used in accordance with one another. In a more modern environment, corporate restructurings are referred to as M&A transactions rather than a merger or an acquisition. The differences between the two are becoming less and less recognized. How the purchase is relayed to the public is becoming increasingly important, as something seen as potentially hostile can be hugely damaging to the acquiring company’s reputation.
To read more on this topic, visit:
- A complete financial model for mergers and acquisitions (M&A). Includes DCF, accretion/dilution, sensitivity, much more.202 remove_red_eye
M&A Model - Accretion Dilution Excel Model Template + InstructionsExcel training model for mergers and aquisiton and accretion/dilution analysis26 remove_red_eye
Synergy Valuation Premium DCF Excel ModelA Premium Discounted Cash Flow DCF Model including synergy valuation765 remove_red_eye
Illustration of different valuation and merger techniquesDetailed excel model analysing the details of the Cadbury/Kraft merger86 remove_red_eye
How to use history in making an acquisition analysisAn extensive excel tool for acquisition analysis, and how to use history when making an acquisition analysis.29 remove_red_eye
Merger analysis of an Acquisition of Retail Shops3 Excel files to demonstrate the merger analysis of an acquisition of retail shops.54 remove_red_eye
How to combine two standalone excel models to create a Merger ModelVideo and 2 Excel files that help you know how to combine two models and create a merger model.24 remove_red_eye
Merger Model - Consolidation of Two CompaniesFinancial Model for a business merger focussing on the consolidation of two companies.125 remove_red_eye
M&A Analysis Bank Excel ModelDetailed excel financial model for mergers and acquisitions.199 remove_red_eye
Leveraged Buyout Case on HeinzVideo lecture on core LBO fundamentals using the acquisition of Heinz as an example.58 remove_red_eye
Discounted Cash Flow (DCF) ModelA step by step Discounted Cash Flow Analysis Tutorial (DCF model)18,554 remove_red_eye
LBO model - Leveraged Buyout AnalysisA step by step LBO model tutorial. It is easy to use and we provide support if needed. Have fun modeling!9,468 remove_red_eye
Accretion Dilution Template Excel Model (Stock Exchange)Simple Accretion Dilution Model for you to quickly work out if an acquisition will generate value for a public company.75 remove_red_eye$9.00by Alexander Jarvis
How to Prepare For A Merger And Acquisition Transaction Using 9 TacticsHere you will find 9 key ways of preparing for a merger and acquisition transaction.38 remove_red_eye
Merger Synergy Valuation Excel ModelThis Excel Model estimates the value of synergy in a merger.1,206 remove_red_eye
Merger & LBO Model Valuation ExcelThis LBO model in excel analyzes the value of equity and the firm in a leveraged buyout operation.4,927 remove_red_eye
- Have a M&A Model to Share?
Your M&A ModelPublish your Model
Have a Mergers & Acquisitions (M&A) model to share?Publish a model
Any questions on Mergers & Acquisitions (M&A)?
The user community is here to help. Go ahead!