Learning Outcome Statements

1. Definitions and classifications

a. classify merger and acquisition (M&A) activities based on forms of integration and relatedness of business activities;

2. Motives for merger

b. explain common motivations behind M&A activity;

c. explain bootstrapping of earnings per share (EPS) and calculate a company's postmerger EPS;

3. Mergers and industry life cycle

d. explain, based on industry life cycles, the relation between merger motivations and types of mergers;

4. Transaction characteristics

e. contrast merger transaction characteristics by form of acquisition, method of payment, and attitude of target management;

5. Takeovers

f. distinguish among pre-offer and post-offer takeover defense mechanisms;

6. Regulation

g. calculate and interpret the Herfindahl-Hirschman Index and evaluate the likelihood of an antitrust challenge for a given business combination;

7. Target company valuation

h. compare the discounted cash flow, comparable company, and comparable transaction analyses for valuing a target company, including the advantages and disadvantages of each;

i. calculate free cash flows for a target company and estimate the company's intrinsic value based on discounted cash flow analysis;

j. estimate the value of a target company using comparable company and comparable transaction analyses;

8. Bid evaluation

k. evaluate a takeover bid and calculate the estimated post-acquisition value of an acquirer and the gains accrued to the target shareholders versus the acquirer shareholders;

l. explain how price and payment method affect the distribution of risks and benefits in M&A transactions;

9. Who benefits from mergers?

m. describe characteristics of M&A transactions that create value;

10. Corporate restructuring

n. distinguish among equity carve-outs, spin-offs, split-offs, and liquidation;

o. explain common reasons for restructuring.