an introduction to mergers & acquisitions · bunin management advisors, llc - all rights...

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An Introduction to Mergers & Acquisitions

Presented byJeffrey H. Bunin

Adj. Prof., Rutgers Business SchoolBunin Management Advisors, LLC

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The Aquisition Process

Determine Objectives

Criteria

Indentify Candidates

Evaluate Candidates

Negotiate

Due Diligence

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Merger ObjectivesAdvances the Business Objectives as defined the Strategic Plan which may include:

n Horizontal Expansion to increase market share and increase returns to scale

n Vertical Expansion to decrease dependence from suppliers and decrease costs

n Product Expansion to increase sales to existing and new customers

n New Technology for New/Improved Products to increase sales and/or lower costs to company and maybe lower prices to customers.

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Steps in a Good Merger Process

n Manage Preacquisition Phasen Screen Candidatesn Value Remaining Candidatesn Negotiaten Manage Post Merger Integration

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Steps in a Good Merger Process

n Manage reacquisition phasen Instruct staff on secrecy requirementsn Evaluate your own company through a

Strategic Planning process to understand the role M&A will play and make sure you are prepared for it by being able to capitalize on economies to scale and exploit technology or skills transfer.

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Steps in a Good Merger Process

n Screen Candidatesn Look at public companies, divisions of

companies and private companiesn Prioritize opportunitiesn Identify elimination criterian Decide on how to use investment banks =

best used for business restructuring for financial engineering opportunities

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Steps in a Good Merger Process

n Elimination Criterian Size : Too large or too small?n Location: of Sales, of Operations?n Business Segments: Are some

unattractive? Can they be profitability sold?n Overall Performance: Is business well run

and if not, can you improve itn Availability: Friendly or Hostile combination

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Steps in a Good Merger Process

n Merger Criterian Industry/Segmentn Distribution Channelsn Sizen Locationsn Historical Performance – Financial, Customer

Satisfaction, Reputationn Existing Managementn Barriers to Acquisition – Political, Governmental,

Financing, Legal Issues

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Steps in a Good Merger Process

n Identifying Candidatesn Horizontal – Competitorsn Vertical – Suppliers and/or Customersn Products and New Technology– New

Emerging Companies

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Steps in a Good Merger Process

n Value remaining candidatesn Know exactly how you will get back

takeover premiumn Identify real synergiesn Decide on restructuring plann Decide on financial engineering

opportunities (investment bankers)

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Steps in a Good Merger Process Valuation: Evaluating CandidatesFramework of Analysis of Target Company

Externaln Market/Industryn Competitionn Environment

Internaln Products/Servicesn Operationsn Organizationn Resources

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Steps in a Good Merger Process

Valuation: Market / Industry Issuesn Market Size and Growth n Market Segmentationn Company Relative Market sharen Industry Trends and Economic Outlookn Nature and History of Businessn Company’s Position in Industryn Research and Developmentn Relative Leverage of Buyers and Suppliers

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Steps in a Good Merger Process

Valuation:Competitive Issuesn Who Are Existing and Potential Competitors

due to Acquisitionn Competitor's Strengths and Weaknesses

n Market Sharen Products/Servicesn Distribution Channelsn Cost Position

n Counter Strategies for Key Competitors

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Steps in a Good Merger Process

Valuation: Products/Services Issues

n Match of Products to Market Segmentsn Product Profitabilityn Customer/Market Segment Profitabilityn Relative Qualityn Relative Service Levels

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Steps in a Good MergerProcess

Valuation:Operations/Organization Issuesn Marketing and Distribution Channelsn Physical Production Resources and

Capabilitiesn Company’s Managementn Company’s People Resources and Gapsn Company’s Operational Strengths and

Weaknesses

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Steps in a Good Merger Process

n Negotiaten Decide on maximum price and stick to itn Understand background and incentives of the

other siden Understand value that might be paid by third

partyn Establish negotiation strategyn Conduct due diligence

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Steps in a Good Merger Process

n Manage post merger integrationn Move as quickly as possiblen Carefully manage the process

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M & A Information Resources

n Ibbotson Associates, Inc. publicationsn McKinsey & Company, Inc. publications

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Jeffrey H. Bunin

n B.Ch.E. – CCNYn M.B.A. – Rutgersn Adjunct Professor,

Rutgers MBA Programn 20+ years of REAL

WORLD BUSINESS PLANNING EXPERIENCE in chemicals, manufacturing and high-tech

n References available upon request

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End Presentation

n Thank You for viewing this slide show.n Please contact me soon to discuss your future needs.

Jeffrey H. Bunin, B.Ch.E., MBAAdj. Prof., Rutgers Business School

Bunin Management Advisors, L. L. C.159 Franklin Street Unit 16Bloomfield, NJ 07003-4973

973-748-7572 v973-748-2517 f

jbunin@buninmanagementadvisors.comwww.buninmanagementadvisors.com