The final project for this course is the creation of a merger proposal for two companies. This is an individual project. You will choose two companies and will have to analyze and then propose a merger. The purpose of this project is to simulate the aspects of a real world merger. This project is divided into three milestones, submitted in Module Three, Module Seven, and Module Ten.
To successfully complete this project, you will be expected to apply what you have learned in this course and should include several of the following course outcomes and learning objectives:
• Analyze the role of corporate restructurings in the corporate world by assessing the value added and synergy from mergers and acquisitions
• Compare and contrast mergers and acquisitions by examining each and evaluating the effect on corporations
• Analyze the financial and economic impact of mergers and acquisitions by applying the principles of capital structure, firm valuation, cost of capital, capital budgeting, and quantitative risk assessment
• Analyze the potential success and/or failure of a merger deal by reviewing the post-merger performance and valuation of the company
• Apply managerial decision-making strategies with mergers and acquisitions to companies, based on comprehensive research and analysis of recent, similar deals
• Present scholarly papers through research, preparation, and analysis of contemporary merger and acquisition issues
Main Elements
Part I: Introduction ( 3 to 4 Pages )
• Choose two companies in the United States.
• Describe the companies and their products and respective industries.
• Provide a brief analysis of their annual financial reports (last three years).
• Provide a trend analysis of financial ratios over the three years. In your trend analysis, analyze the company in terms of liquidity, profitability, market value, and capital structure.
Part II: Analysis ( 3 to 4 Pages )
• Describe why you see synergistic effects between the two companies.
• Describe the potential growth after a merger.
• Support your arguments based on financial information of Milestone One.
• Do you anticipate any anti-takeover measure from the target company? If yes, what would you advise the bidder?
• Are there any anti-takeover measures that apply to these companies? If yes, include them here.
• Could there be agency problems in a potential deal? From the bidder’s standpoint? From the target’s standpoint?
Part III: Proposal ( 3 to 4 Pages)
• Examine and describe the post-merger company (valuation, competitive advantage).
• Conclude by presenting a strong case to the executive management teams. Your goal is to sell the project as a successful merger for both bidder and target companies.
• You must have evidence based on research and using industry analysis and company valuation strategies. Be sure to include counterarguments as needed.
• Do you anticipate any issue on the post-merger company (corporate culture, management structures, etc.)?
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