Please answer the following questions: 1) Executive Summary:
Please answer the following questions: 1) Executive Summary: In 1–2 pages, describe key objectives, why the acquisition is preferable to alternative options (such as organic growth), why the target in question is more attractive than other potential targets, the amount and composition of the proposed (or completed) purchase price, how it will be financed, and key risks associated with the transaction. 2) Industry/market definition: Define the industry/market in which the acquiring firm competes in terms of size, growth, product offering, and other relevant characteristics. This section should contain a brief overview of the industry covering (a) industry concentration and major industry players,(b) recent mergers, and (c) major competitors. 3.Goals and synergies: Identify the specific purpose of the acquisition. This should include what specific goals are to be achieved and synergies realized(e.g., cost reduction, access to new customers, distribution channels or proprietary technology, expanded production capacity, etc…). The best source for this information will be in the acquirer’s (or target’s) SEC filings. 4.Undisturbed stock price: What is your estimate of the target’s “undisturbed” stock price? Explain how you arrived at your estimate. 5.Target’sstand-alone valuation: Provide a range of standalone valuations of the target on a per-share basis, and state key forecast assumptions underlying the projected financials and valuation models. Use the acquisition announcement date as the date of valuation. How do these valuations compare to your estimate of the target’s undisturbed share price? 6.Estimated value of synergies: Provide a per-target-share estimate of the value of synergies that the acquirer could expect to realize from the merger. List key forecast assumptions. 7.Purchase (offer) price estimate: Develop a minimum and maximum purchase price range (on a per-share basis) for the target, the latter of which will include the full estimated value of the synergies identified in #6above. Does the offer actually made by the acquirer appear to be a good deal for your client? 8)Financing: Justify the financing(i.e., cash, stock, debt, or some combination) of the offer, and why you believe this composition is (or is not) appropriate in terms of meeting the primary needs of acquirer shareholders. Explain whether the proposed (or completed) offer will endanger your client’s creditworthiness, erode near-term profitability and cash flow, or result in substantial dilution of earnings per share (EPS). 9)Integration: Identify potential integration challenges and possible solutions. 10)Summary and conclusion. I did questions 3-7 already and there are some feedbacks from my teacher can you please have a look and correct it. FEEDBACK (NEED CORRECTION): 1) NWC is very tricky for financial service firms, as you can see from the fact that AMTD does not report CA or CL. You will need to create your own CA and CL. Here’s what I would do if I were you: and this is basically just a suggestion because financial service firms are tricky and many analysts suggest not even trying to calculate NWC for banks and financial service firms. Let’s just focus on the “affiliate” line items: so take as current assets row 23 (”Receivable from affiliates”) and as current liabilities row 56 (“Payable to affiliates”). That’s a little bit of a workaround, but, as I said earlier, many analysts suggest not even trying to calculate NWC for financial service firms. That change will give you NWC of around 2% of sales, which (in my opinion) is completely reasonable. 2) In terms of the stand-alone price of AMTD, I just literally have no idea what the following means (from your Word doc): “We were able to achieve an undisturbed stock price of $107.44 for our target TD Ameritrade by getting the Average implied value by summing the revenues and EBITDA. Subtract the book value of long term debt and finally dividing by the total number of shares” Can you not follow what we did in class to get the stand-alone price? 3) The biggest weakness I see with both your document and Excel file is the with-synergies valuation. There is just no detail in your Word doc about where you think synergies are coming from, and how that affected the assumptions that went into your model. Be specific: how (and why) is the with-synergies valuation model any different from the stand-alone model? As far as I can tell, they’re fundamentally EXACTLY the same. For example, the yellow boxes containing the assumption for both valuations are identical between those two sheets… And yet the bottom-line valuation numbers are different. I’m just not sure that I understand this, and it definitely needs to change in the next few weeks. In addition to using the teacher’s feedback to correct the excel and word document, please check all the calculations in ‘Project Milestone 3440 Calculations’ (That Excel Document). Please use exhibits in the word document from the excel document to further illustrate the calculations and express certain points in the proposal. The word document is an ‘Acquisition Proposal’ in regards to the TD Ameritrade and Charles Schwab Deal.
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