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8K Release Mergers & Acquisitions

Explore the world of mergers and acquisitions, with insights into their benefits, challenges, and key considerations for success. Discover the factors that make or break deals, uncover common questions and concerns, and learn how to effectively integrate acquired companies. Get guidance on financing options, GAAP vs. Pro Forma reporting, and gain a comprehensive understanding of M&A in today's business landscape.

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8K Release Mergers & Acquisitions

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  1. 8K ReleaseMergers & Acquisitions Kevin M Brett April 30, 2013

  2. Let’s Make a DealFriendly or Hostile • 1,896 mergers or acquisitions • $471.5 billion • Hewlett Packard/Compaq • Disney/ABC • ABC/ESPN • AOL/ Time Warner • Time/Warner Brothers • Daimler Benz/Chrysler • Budweiser/Corona

  3. Why M&A? • Gain new technology and talent • Grow Revenue • Strategic Assets • Market Share • Synergies

  4. Change Resistant? • “I'm all for progress. It's change I object to.” – Mark Twain

  5. Why NOT M&A • Approximately 70 percent of deals fail • Inadequate “Due Diligence” • Acquiring companies blow integration • Acquired employees head for the exits • Need to welcome acquired employees

  6. Common Questions on Deals • Size of Deal? • Financing? • How many are going to be laid off? • Is the deal accretive or dilutive to EPS? • Is there any product or customer overlap? • How will you integrate the two companies? • Anti-Trust Issues? • Will you report the deal on a Pro Forma basis?

  7. Financing the Deal?Paying a “Premium?” • Cash from Balance Sheet • Stock (1 for 1 or Ratio) • S4 (Issue More Stock) • LBO (Leveraged Buyout): Combo of Cash/Stock and Debt

  8. GAAP vs. Pro Forma • GAAP Greater or Equal Prominence to Pro Forma – SEC Reg. G • GAAP: Generally Accepted Accounting Principles • Pro Forma, Non-GAAP or Earnings Before Special Items • Pro Forma: “For The Sake of Form” • Pro Forma: Results from Continuing Operations

  9. GAAP: Q1 Income StatementMallard.com (DUCK: NASDAQ) • Revenues: $2 million • COGS: $1 million • Gross Margin: $1 million • SG&A: $250,000 • R&D: $250,000 • Amortization: $1 million • Operating Margin: ($500,000) • Taxes: $200,000 • Net Loss: ($700,000)

  10. Pro Forma: Q1 Income StatementMallard.com (DUCK: NASDAQ) • Revenues: $2 million • COGS: $1 million • Gross Margin: $1 million • SG&A: $250,000 • R&D: $250,000 • Operating Margin: $500,000 • Taxes: $200,000 • Net Income (Loss): $300,000

  11. Writing the M&A Release (8K)

  12. DOJ Sues to Block $20.1 Billion BUD/Corona Merger • Anheuser Busch, 39% • Miller Coors, 26% • Grupo Modelo, 7% • Heineken USA, 6% • Others, 22%

  13. M&A (8K) Class Assignment

  14. M&A (8K) Class Assignment

  15. M&A (8K) Class Assignment

  16. M&A (8K) Class Assignment

  17. M&A News Release Guidelines • “Class Assignment: Do Not Trade” • Both companies announce definitive merger agreement • Establish the price of the deal • Announce cash and/or stock financing (1 for 1) • Accretive to acquiring company’s EPS in one year • Subject to successful completion of Hart-Scott-Rodino and other closing conditions • Quotes from both CEOs • Both Boilerplates/One Safe Harbor

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