This course familiarizes participants with the structure and key sections of a credit agreement.
- Type of facilities
- Bank roles
- Borrower (not always corporate parent)
- Rates
- Committed vs best efforts
- Repayment terms
- Covenants
- Fees
- Hedges (if applicable)
- Priority of payment
- Cash flow waterfall
- Bankruptcy priority
- Use of proceeds
- Event of default
This course familiarizes participants with the structure and key sections of a purchase agreement. Throughout the course participants examine the various sections of the purchase agreement to understand the impact on each party involved in the transaction (buyer vs. seller).
- Definitions
- Sale and transfer of shares
- Representations and warranties of seller / buyer prior to closing
- Covenants of seller / buyer prior to closing
- Conditions precedent to buyer’s obligation to close
- Conditions precedent to seller’s obligation to close
- Termination
- Indemnification / remedies
- Key exhibits
This Excel-based course will look at the impact of various capital structure options on a company’s projected financials and credit statistics. The course will begin with participants building a 3 statement standalone operating model. From here, participants will examine various financing alternatives (equity and debt) and incorporate these new scenarios into a pro form operating model. Participants will calculate pro forma EPS, accretion-dilution, synergies to breakeven and credit metrics to understand the impact of each alternative on the pro forma financials of the company. Pros and cons of each financing alternative and tax consequences will also be discussed. Topics covered include:
- 3 statement standalone and pro forma financial modeling
- Sources and uses
- Debt and equity financing alternatives
- Pro forma EPS analysis
- Accretion-dilution analysis
- Credit ratio analysis
- Potential credit rating impact
- Scenarios analysis and self-referencing if statements
How an M&A transaction is structured can drive value for both the buyer and seller and have future tax consequences. This course discusses the difference between asset and stock deals, step-ups in assets and deferred tax consequences, goodwill treatment and Section 338(h)(10) tax elections. The second half of the course also deals with net operating losses and potential treatment during M&A.
- Asset vs. stock deals
- Legal entity vs. consolidated financials
- Goodwill
- Step-ups
- Deferred tax
- Buyer and seller preferences
- Section 338(h)(10) elections
- Modeling
- Deferred tax
- Ascribing value to 338(h)(10) elections from the buy-side and sell-side
- Net operating losses
- Carry forwards
- Limitations
This course focuses on divestiture and restructuring alternatives including spins, splits and equity carve outs. The accounting, modeling and rationale of each alternative is covered.
- Private sale or IPO
- Equity carve-out
- Spin-off
- Split off
Participants build a full three statement LBO model layering in a complex capital structure. The need for two levels of equity ownership is discussed and returns to the equity holders and mezzanine holders are calculated after completion of the fully integrated model.
- Differences between the short-form and long-form LBO
- Sources of capital and associated costs / attributes
- Term loans A, B and C
- Second lien
- Mezzanine and high yield
- Preferred equity
- Common equity
- PIK interest
- PIK dividends
- Warrants
- Rollover of existing management equity
- Understanding the need for two types of equity in the capital structure
- Constructing the opening, pro forma balance sheet
- Constructing the projected income statement, balance sheet and cash flow statement
- Cash sweep with mandatory and accelerated payments
- Calculating returns to equity and mezzanine holders
Participants build a full three statement M&A model with relevant outputs.
- Need for long-form M&A model versus short-form
- Standalone acquirer and target models
- Asset vs. stock deal toggle and related tax consequences
- Deal terms
- Transaction data
- Key assumptions
- Sources and uses
- Fees (advisory, equity, debt)
- Deal goodwill
- Combo shares & Refinancing debt
- Stock vs. cash
- Fair value adjustments and resulting DTLs
- Synergies
- Combo income statement, balance sheet and cash flow statement
- Deal analysis
- EPS accretion/dilution
- Ownership dilution
- Sensitivity analysis
- Synergies-to-break-even analysis
- Credit analysis
- ROIC analysis
- Contribution analysis
- Analysis at various prices
- Ability to pay analysis
Participants build a short-form M&A model while covering key concepts of M&A analysis. Emphasis will be placed on accretion/dilution and ability to pay.
- Key assumptions and drivers needed to build a short-form M&A model
- Building a flexible sources and uses of funds table
- Stock vs. cash financing
- Relative P/E’s: acquirer P/E vs. debt P/E vs. acquisition P/E
- Earnings accretion/dilution analysis
- Sensitivity analysis
- Synergies-to-break-even analysis
- Analysis at various prices
- Ability to pay analysis