Essential Cheat Sheet for Mergers & Acquisitions Basics môn Sáp nhập, mua lại và tái cấu trúc doanh nghiệp | Trường Đại học Kinh tế Thành phố Hồ Chí Minh

Bojan Radojicic
Financial analysis of target
Define scope for review e.g. 3-5 years Financial statements
Standalone positions in financials
Profitability, liquidity, activity and structure indicators EBITDA normalization
Revenue and expenses impact on EBITDA
Reviewing business units performance Analysis NWC and debt Cyber and tech check FINANCIAL Finance due diligence Tax due diligence COVENANTS PROJECTIONS
1. Sales and other revenue Business and processes
Understanding the tax function Non-Compete Covenant understanding projections
Review external advisor outputs 2. Earnings projections
This covenant prohibits the target
Finance function and team
company or its key employees 3. Operating expense assesment
Review current and past disputes
from engaging in activities that projections
with tax administration
compete with the acquiring 4. Net working capital
company's business for a
Overall Financial Statements
projections (receivables,
specified period of time and Reviewing
Check did the taxpayer submmt all
within a defined geographical
inventory, and liabilities to
tax returns and pay taxes timely area.
Reviewing Specific Balance Sheet suppliers)
Non-Solicitation Covenant Positions
Standardized list of questions to the
5. Long-term and fixed asset client
and depreciation projections
Analyzing Financial Performance
This covenant restricts the target
6. Financial liability and interest
Prepare sampling for reviews
company from soliciting or hiring expense projections
Assessing Financial Controls
employees or customers of the
7. Other balance sheet item CIT testing
acquiring company for a certain projections
period after the merger or
Examining Contracts and
acquisition. It helps prevent the 8. EBITDA projections Agreements VAT testing
loss of key talent or customers to
9. Cash flow projections competitors. POST TRANSACTION Assessing Contingencies
PIT and other taxes testing
Confidentiality Covenant ACCOUNTING
his covenant ensures that both parties maintain the
Financial consolidation and
confidentiality of sensitive
information shared during the integrations due diligence process and subsequent integration
Financial reporting requirements VALUATION Financial Covenant
Pruchase price allocation: APPROACH AND
These covenants are designed to
Indentificaion and valuation of
maintain certain financial ingnagbile asset METHOS
performance levels after the
merger or acquisition. They may FMV of tangible assets
include requirements related to
debt-to-equity ratios, liquidity,
Goodwil calculation and recognition
revenue targets, profitability, or other financial metrics.
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