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Learn Merger models

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B Basic

Why companies buy, and how they pay7m
Accretion and dilutionPro10m
The P/E shortcut and the cost of each currencyPro8m

A Advanced

Purchase price allocation and goodwillPro10m
Synergies and break even synergiesPro9m
Deal structure, exchange ratios, and contributionPro9m

FlashcardsPro0/25
Basic quizPro80% passes
Advanced quizPro80% passes
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Merger models

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Flashcards Start the first lesson

Why companies buy each other, how the deal is paid for, and the math bankers run first: accretion and dilution, goodwill, synergies, and the exchange ratio.

BBasic3 lessons

1Why companies buy, and how they payAn acquisition is a bet that two businesses are worth more together. How the buyer pays, in cash, stock, or new debt, changes who carries the risk and what the deal does to earnings.7 min
2Accretion and dilutionProThe first question about any public deal: does the buyer's earnings per share go up or down? Combine the earnings, subtract the cost of the money used, divide by the new share count.10 min
3The P/E shortcut and the cost of each currencyProCompare what each form of payment costs in earnings with what the target earns per dollar of price. If the money is cheaper than the target's yield, the deal is accretive.8 min
Basic quizPro8 questions, 80% passes

AAdvanced3 lessons

4Purchase price allocation and goodwillProThe buyer's price rarely matches the target's book value. Purchase accounting writes assets up to fair value, books the tax effect, and calls whatever is left goodwill.10 min
5Synergies and break even synergiesProSynergies are the extra profit the combination is supposed to create. Break even synergies are the amount needed to turn a dilutive deal neutral.9 min
6Deal structure, exchange ratios, and contributionProHow a deal is legally structured changes taxes for both sides, and in stock deals the exchange ratio and contribution analysis decide who owns what.9 min
Advanced quizPro8 questions, 80% passes