经典书籍Investment Banking-Valuation, Leveraged Buyouts and Mergers and Acqu...

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Investment Banking-Valuation, Leveraged Buyouts and Mergers and Acquisitions
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bout the Authors
xiii
Foreword
xv
Acknowledgments
xvii
Supplemental Materials
xxi
INTRODUCTION1
Structure of the Book2
Part One: Valuation (Chapters 1–3)3
Part Two: Leveraged Buyouts (Chapters 4 & 5)5
Part Three: Mergers & Acquisitions (Chapter 6)6
ValueCo Summary Financial Information6
PART ONE
Valuation
CHAPTER 1
Comparable Companies Analysis11
Summary of Comparable Companies Analysis Steps12
Step I. Select the Universe of Comparable Companies15
Study the Target15
Identify Key Characteristics of the Target for Comparison
Purposes16
Screen for Comparable Companies20
Step II. Locate the Necessary Financial Information21
SEC Filings: 10-K, 10-Q, 8-K, and Proxy Statements21
Equity Research23
Press Releases and News Runs24
Financial Information Services24
Summary of Financial Data Primary Sources24
Step III. Spread Key Statistics, Ratios, and Trading Multiples25
Calculation of Key Financial Statistics and Ratios27
Supplemental Financial Concepts and Calculations39
Calculation of Key Trading Multiples44
Step IV. Benchmark the Comparable Companies48
Benchmark the Financial Statistics and Ratios48
Benchmark the Trading Multiples48
vii
viii
CONTENTS
Step V. Determine Valuation49
Valuation Implied by EV/EBITDA50
Valuation Implied by P/E50
Key Pros and Cons52
Illustrative Comparable Companies Analysis for ValueCo53
Step I. Select the Universe of Comparable Companies53
Step II. Locate the Necessary Financial Information54
Step III. Spread Key Statistics, Ratios, and Trading Multiples55
Step IV. Benchmark the Comparable Companies65
Step V. Determine Valuation69
CHAPTER 2
Precedent Transactions Analysis71
Summary of Precedent Transactions Analysis Steps72
Step I. Select the Universe of Comparable Acquisitions75
Screen for Comparable Acquisitions75
Examine Other Considerations75
Step II. Locate the Necessary Deal-Related and Financial Information77
Public Targets78
Private Targets80
Summary of Primary SEC Filings in M&A Transactions81
Step III. Spread Key Statistics, Ratios, and Transaction Multiples81
Calculation of Key Financial Statistics and Ratios81
Calculation of Key Transaction Multiples89
Step IV. Benchmark the Comparable Acquisitions92
Step V. Determine Valuation93
Key Pros and Cons94
Illustrative Precedent Transaction Analysis for ValueCo95
Step I. Select the Universe of Comparable Acquisitions95
Step II. Locate the Necessary Deal-Related and Financial
Information95
Step III. Spread Key Statistics, Ratios, and Transaction Multiples98
Step IV. Benchmark the Comparable Acquisitions105
Step V. Determine Valuation106
CHAPTER 3
Discounted Cash Flow Analysis109
Summary of Discounted Cash Flow Analysis Steps110
Step I. Study the Target and Determine Key Performance Drivers114
Study the Target114
Determine Key Performance Drivers114
Step II. Project Free Cash Flow115
Considerations for Projecting Free Cash Flow115
Projection of Sales, EBITDA, and EBIT116
Projection of Free Cash Flow118
Step III. Calculate Weighted Average Cost of Capital124
Step III(a): Determine Target Capital Structure125
Step III(b): Estimate Cost of Debt (rd)126
Contents
ix
Step III(c): Estimate Cost of Equity (re)127
Step III(d): Calculate WACC131
Step IV. Determine Terminal Value131
Exit Multiple Method132
Perpetuity Growth Method132
Step V. Calculate Present Value and Determine Valuation134
Calculate Present Value134
Determine Valuation135
Perform Sensitivity Analysis137
Key Pros and Cons139
Illustrative Discounted Cash Flow Analysis for ValueCo140
Step I. Study the Target and Determine Key Performance Drivers140
Step II. Project Free Cash Flow140
Step III. Calculate Weighted Average Cost of Capital146
Step IV. Determine Terminal Value151
Step V. Calculate Present Value and Determine Valuation153
PART TWO
Leveraged Buyouts
CHAPTER 4
Leveraged Buyouts161
Key Participants163
Financial Sponsors163
Investment Banks164
Bank and Institutional Lenders165
Bond Investors166
Target Management167
Characteristics of a Strong LBO Candidate168
Strong Cash Flow Generation169
Leading and Defensible Market Positions169
Growth Opportunities169
Efficiency Enhancement Opportunities170
Low Capex Requirements170
Strong Asset Base171
Proven Management Team171
Economics of LBOs171
Returns Analysis – Internal Rate of Return171
Returns Analysis – Cash Return172
How LBOs Generate Returns173
How Leverage is Used to Enhance Returns174
Primary Exit/Monetization Strategies176
Sale of Business177
Initial Public Offering177
Dividend Recapitalization177
LBO Financing: Structure178
LBO Financing: Primary Sources180
Bank Debt180
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CONTENTS
High Yield Bonds
184
Mezzanine Debt
186
Equity Contribution
187
LBO Financing: Selected Key Terms
188
Security
188
Seniority
189
Maturity
190
Coupon
190
Call Protection
191
Covenants
192
CHAPTER 5
LBO Analysis
195
Financing Structure
195
Valuation
195
Step I. Locate and Analyze the Necessary Information
198
Step II. Build the Pre-LBO Model
198
Step II(a): Build Historical and Projected Income Statement
through EBIT
199
Step II(b): Input Opening Balance Sheet and Project Balance
Sheet Items
201
Step II(c): Build Cash Flow Statement through Investing Activities
203
Step III. Input Transaction Structure
206
Step III(a): Enter Purchase Price Assumptions
206
Step III(b): Enter Financing Structure into Sources and Uses
208
Step III(c): Link Sources and Uses to Balance Sheet
Adjustments Columns
209
Step IV. Complete the Post-LBO Model
215
Step IV(a): Build Debt Schedule
215
Step IV(b): Complete Pro Forma Income Statement from
EBIT to Net Income
222
Step IV(c): Complete Pro Forma Balance Sheet
224
Step IV(d): Complete Pro Forma Cash Flow Statement
226
Step V. Perform LBO Analysis
230
Step V(a): Analyze Financing Structure
230
Step V(b): Perform Returns Analysis
232
Step V(c): Determine Valuation
235
Step V(d): Create Transaction Summary Page
236
Illustrative LBO Analysis for ValueCo
238
Transaction Summary
238
Income Statement
238
Balance Sheet
238
Cash Flow Statement
238
Debt Schedule
238
Returns Analysis
238
Assumptions Page 1—Income Statement and Cash Flow Statement
238
Assumptions Page 2—Balance Sheet
238
Assumptions Page 3—Financing Structures and Fees
238
Contents
xi
PART THREE
Mergers & Acquisitions
CHAPTER 6
M&A Sale Process
251
Auctions
252
Auction Structure
255
Organization and Preparation
257
Identify Seller Objectives and Determine Appropriate Sale Process
257
Perform Sell-Side Advisor Due Diligence and Preliminary
Valuation Analysis
257
Select Buyer Universe
258
Prepare Marketing Materials
259
Prepare Confidentiality Agreement
261
First Round
262
Contact Prospective Buyers
262
Negotiate and Execute Confidentiality Agreement with
Interested Parties
263
Distribute Confidential Information Memorandum and
Initial Bid Procedures Letter
263
Prepare Management Presentation
264
Set up Data Room
264
Prepare Stapled Financing Package
265
Receive Initial Bids and Select Buyers to Proceed to Second Round
267
Second Round
270
Conduct Management Presentations
271
Facilitate Site Visits
271
Provide Data Room Access
271
Distribute Final Bid Procedures Letter and Draft Definitive
Agreement
272
Receive Final Bids
276
Negotiations
276
Evaluate Final Bids
277
Negotiate with Preferred Buyer(s)
277
Select Winning Bidder
277
Render Fairness Opinion
277
Receive Board Approval and Execute Definitive Agreement
278
Closing
278
Obtain Necessary Approvals
278
Financing and Closing
280
Negotiated Sale
281
Bibliography and Recommended Reading
283
Index
289
About the Authors
JOSHUAROSENBAUMisanExecutiveDirectoratUBS
Investment Bank in the Global Industrial Group. He
advises on, structures, and originates M&A, corporate
finance, and capital markets transactions. Previously,
he worked at the International Finance Corporation, the
directinvestmentdivisionoftheWorldBank.Hereceived
his AB from Harvard and his MBA with Baker Scholar
honors from Harvard Business School. Rosenbaum is
the coauthor of the HBS case study “OAO YUKOS Oil
Company.”
JOSHUA PEARL has structured and executed numer-
ous leveraged loan and high yield bond financings, as
well as LBOs and restructurings, for Deutsche Bank’s
Leveraged Finance Group. Previously, he worked at A.G.
Edwards in the Investment Banking Division. Pearl has
also designed and taught corporate finance training
courses. He received his BS in Business from Indiana Uni-
versity’s Kelley School of Business.