Mergers & Acquisition: Combination Analysis

Individual Assignment - Combination Analysis Homework

Mergers and Acquisitions

I. Introduction (Objective of the Assignment) It is common in Mergers & Acquisitions to create pro forma combined financial statements (and resulting key ratios) for a potential merger or acquisition scenario. The output can vary, but the general exercise is referred to as a “Combination Analysis” (or sometimes a “Contribution Analysis”). The key takeaways from the Combination Analysis can include combined earnings per share (and whether the deal is accretive or not), synergies required to achieve breakeven earnings per share (if initially dilutive), and implied pro forma credit rating. The ability to successfully complete a Combination Analysis is critical due to the importance of a firm’s EPS and targeted capital structure/credit rating. You will complete an abbreviated Combination Analysis to demonstrate your understanding of the key formulas and financial statement relationships inherent in the M&A decision-making process. II. Assignment Requirements Complete the combination analysis and questions found in the Excel file located in your assignment instructions. Please refer to chapters 16, 17, and 21 for more information on Combination Analyses. III. Assignment Format You will find an Excel file in your assignment instructions. Please complete the activity and submit it.

IV. Rubric This is an individual assignment and accounts for 5% of your overall grade. You will be assessed according to the following rubric.

Criteria Superior High Quality

Average Below Average

Poor

Assignment Requirements - All calculations are completed correctly, excel worksheet is used to produce the pro forma financial statements, key ratios are identified and briefly noted.

50 - 46 pts

45 - 40 pts

39 - 35 pts.

34 - 30 pts.

29 - 0 pts.