This is a lot of money ($30 billion). Where is Lina in this one, especially given food inflation? Big Oil, Big Tobacco, Big Pharma, etc. . . . now Big Food?
How could one justify paying $8 billion for Kohls, which has a market value of $1.5 billion? What do the potential new owners see?
How would you spend the “excess cash”? If M&A, how would you ID a target? If you needed advisory services, to whom would you turn?
Is a goodwill impairment a leading indicator, or lagging? Why do you think impairments are on the rise?
If you were CFO of Huntsman, your overseas cash just became cheaper and thus more accessible. What would you do with it? How would you decide?
Merck’s goal is to deleverage, yet M&A is crucial to pharma growth. So, if you were CEO/CFO, how would you find a balance?
Why is there a trend toward “de-equitizing” the capital markets? Do you believe (over) regulation of public companies plays a part? If you needed cash, what options are available and how would you choose?
How would you measure and assess whether firms’ cultures would be compatible after a merger? Is there a “match.com” for merger partners?
How is a “bad” M&A deal reflected in accounting measures? Do you think firms do pay more for a target in anticipation of being able to carry out the integration efficiently and effectively?
If you were on the board of directors, how would you try to quantify synergy as part of your due diligence responsibility in M&A? Is it necessary to do so?
If you were targeting a firm in an M&A, how would you assess aggressive accounting practices of the target firm? How could you tell if non-GAAP accounting measures better reflect economic reality, or obfuscate it?
Deals in the M&A market are increasing. Name as many factors as you can that you think are driving the increase.
Can you journalize the following? a) A private equity firm pays $35 to owners of a target firm; b) then, the target firm borrows $65; c) finally, the target firm pays out all $65 to buy out the remaining owners. What are the qualitative effects on current leverage ratios from the above? What are some probable effects on future earnings (net income) from the above? Why is debt a double-edged sword?
Why does the stock price typically drop for the acquiring firm when an acquisition is announced, especially when the acquisition is undertaken to “add value”? In your opinion, is Walgreens acquisition of Alliance a good move for Walgreens? Why or why not?
Can you give an example of how alleged accounting errors/improprieties affect M&A deals in the works?
