Bank Transaction Analysis

This course looks at:

Consolidation in the banking sector

• Historical transaction analysis: premiums paid and transaction multiples
• Cost  and revenue synergies
• Good deals vs. bad deals: timing, price, synergies and integration challenges
• M&A analytical tools:
  • Transaction multiples
  • Static balance sheet analysis
  • EPS dilution / accretion
  • Dynamic merger modelling

Static balance sheet analysis

• Modelling the pro-forma balance sheet of the combined entity
• Financing bank acquisition: importance of hybrid capital
• Capital ratios pre and post acquisition
• Acquiring bargains and positive impact on capital ratios 

EPS dilution/accretion

• Will an acquisition be EPS dilutive or accretive?
• Impact of synergies and restructuring costs
• Impact of financing
• EPS dilution / accretion over time

Dynamic merger modeling

• Building a dynamic model for the combined entity incorporating forecasts for bidder and target
• Value creation as target standalone value + synergies – price paid
• Will bidder’s share price increase to reflect value creation?

Impact of the credit crisis

• Further impetus to banking consolidation and changing competitive landscape
• Impact of different types of government bailouts
• Key due diligence questions: identifying bargains
• Strategic questions: universal banking model vs pure commercial or investment bank player