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Mergers, Acquisitions & Restructuring - class guide: Home

Tips and techniques for Lessons Learned and Pitchbook project

Guide to Lessons Learned from a Failed M&A Deal

This guide is designed to help you with the Lessons Learned From a Failed Merger & Acquisition Deal and the Pitchbook project. The tabs near the bottom of this page provide information, research tips and instructions for the various sections of your reports and the boxes provide links to the databases you will use for these projects. You will need to login with your USC ID and password to gain access to the databases.

Lessons Learned: Your professor has outlined 11 sections (A-J) for the report.  You will find resources and tips to find information and data that will support your research for most of the sections The TABS will address your project as follows:

  • Section A  - Economic Setting: Buyers Industry TAB, 
  • Section B - Business and Economic Reasons: SEC Filings TAB, Searching the Press TAB
  • Section C - Strategy - Strategy TAB, Searching the Press TAB, M&A Valuation (Thomson One investment reports) TAB
  • Section D - Terms of the transaction: The Deal & Comps Tab, M&A Valuation TAB
  • Section E - Initial Reaction to Deal: The Deal & Comps TAB and M&A Valuation (Thomson One investment reports) TAB
  • Section F - Value Creation - Strategy TAB, M&A Valuation (Thomson One investment reports) TAB
  • Section G - Deal History - The Deal & Comps TAB
  • Section H - The Deal & Comps Tab, M&A Valuation TAB
  • Section I - Impact on the Buyer: Strategy TAB, The Deal & Comps Tab, M&A Valuation TAB, Searching the Press TAB
  • Section J - Business Industry TAB, Searching the Press TAB, Strategy TAB, M&A Valuation TAB
  • Section K - Your analysis!

 

 

 

 

Company Databases

Market Research (industry information)

Market Research databases typically target related industries, for example, Gartner and Forrester cover IT & Tech, Mintel provides consumer research based on surveys; Passport also covers consumer industries by country, IBISWorld has reports that cover the world, China US and some US States, their reports are varied, across many industries. BCC covers industrials, biotech and chemicals and more! 

 

M&A and Financial Databases

Articles databases

Lessons Learned from a Failed Merger

This section will help you with Section C - STRATEGY

Finding a company's strategy can be a challenge.  But often, the strategy is an upfront statement that can be found on the corporate website.  You can Google the company name + strategy, select a site that comes from the company's website:

Example 1: Google Pepsico strategy; you will see some results for Pepsico select those that come from their website, you may find the strategy pretty easily, it might be in the 'About Us' section or it may less obvious. Take a look at the About Us section of Pepsico.  Pepsico is very clear about its Vision and Mission, but it also describes its strategy in great detail, under 'Our Vision,' 'you will find Faster, Stronger and Better,' but it does not appear under a heading of Strategy.  You have to look (or Ctrl F Strategy). You may also find a company's strategy in an investor presentation: Pepsico Presentation to CAGNY (see page 3)

Example 2: Now Google Apple investors, you will see that Apple does not provide investor's presentations on its website; but its strategy can be found on it's 10K (You will see a link to the 10K, now you can Ctrl F - strategy) and you will find:

Business Strategy The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and services.The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration. As part of its strategy, the Company continues......." (Apple Form 10-K, FY ending September 29, 2018. page 1).  

You might want to find articles or other information to supplement this very broad statement (see the Searching the Press tab)

Example 3: Go to a company's investor's page (Google: name of company + investors), then search the page for 'strategy.'  In the case of Disney, (The Walt Disney Company)  they refer to its '...comprehensive Direct-to-Consumer Strategy at 2019 Investor day'. Now Google 'acquisitions' on the same site, and you will find statements on various acquisitions, including Disney's recent acquisition of 21st Century Fox, including information on how this deal will:

"provide more appealing high quality content..." "create significant long-term value... " but also contribute to its talent (base) and cutting edge technologies...."

Note:  these examples are from 2019 and are subject to change, based on changes made by the company.

This section will help you with Section A - ECONOMIC SETTING OF BUYER'S INDUSTRY

The Industry Research guide will help you get started.  This guide is divided up by major industries.  Many of the resources are limited to USC students (e.g. databases), but there are other information available, such as data and statistics provided by the government, industry associations, and other organizations that produce reports that are available to the public

Tips for for searching industry research (and databases) 

  • Search by company name, or if the company is small or private, some databases, such as IBISWorld cover the top 3-5 players so you will want to search by one of those names (if you know it), or by the industry name (you may have to try different names, e.g., footwear vs. shoes or cars vs automobiles).  You can also search the name of a brand (again, if it is a well known brand). 
  • Don't limit your research for one report; you may have to consult several reports of the same subject to get a 'sanity check.' See if the sources agree, if not, why? The difference can be geographic (U.S. vs. North America); or definition of the industry; is the report in revenue or volume? It is important to understand the definition of the industry, what is included and what is not. Consult as many reports that are available to you. If they differ in size, growth rate, or other issues, find out why. Different reports will also report on different aspects of an industry and may have a different perspective or provide additional information, for example, IBISWorld has information on the industry cost structure and operating environment, whereas Passport may have more detailed information on brand and company market share and/or market segments. 
  • Context is important.  Let's say you are researching the soda market in the U.S., and you find a report that indicates sales have remained fairly constant over the past five years. You may conclude that the soda market is flat; but when you look at the overall beverage market you find that it has been growing each year by 3%, and discover that sodas are actually decreasing as a percentage of sales of the entire beverage market, but flavored waters and sports drinks are increasing as a percentage of sales. The market is growing, but not necessarily the soda segment of that industry.  This would be an important issue.

Be aware of bias in websites and industry funded sources.  It is fine to use such sources, but you need to know what the bias might be.  Industry Associations can provide a ot of good data, but part of their purpose is to promote their industry. 

 

This will help you with SECTION B - BUSINESS ECONOMIC REASONS FOR THE TRANSACTION,  also refer to the Searching the Press TAB.

Public companies are required to file a number of documents, these filings are kept on file at the Securities Exchange Commission, or SEC.  The 10K (annual) and 10Q (quarterly) are comprehensive statements of business and financial condition, and include (but are not limited to)  brief statements on overall strategy, M&A and legal activity, and provide financial statements such as:

  • Income Statement
  • Balance Statement
  • Cash Flow

"All companies, foreign and domestic, are required to file registration statements, periodic reports, and other forms electronically through EDGAR. Anyone can access and download this information for free. Here you'll find links to a complete list of filings available through EDGAR and instructions for searching the EDGAR database."   (SEC)

A list of the forms are available via the SEC Forms list.

 

The USC Libraries has a link to the SEC's database known as SEC Edgar.  This is a public site and is available to anyone.

USC Libraries and/or the Marshall School of Business  also has access to databases such as; they provide links to original documents and/or financial statements downloadable to Excel. Links to these databases can be found above (with exception of FactSet, Bloomberg and Capital IQ).

  • Mergent Online
  • Osris
  • Orbis
  • Mint Global
  • FactSet (see this link for instructions on how to get your virtual account).
  • Bloomberg must be used in the Accounting Library or Gaugan & Tiberti Library
  • Capital IQ maybe made available to you via your professor, but there are terminals in the Gaghan & Tiberti Library for you use.

Research Guides for FactSet, Bloomberg and Capital IQ can be found here.

 

 

 

 

WHO ARE THE COMPETITORS? 

Information on competitors can be found in articles, market research/industry reports and some company profiles. Standard & Poor’s Net Advantage provides industry reports that provide excellent overviews of large industries   Factiva – Companies/Markets provides company and industry ‘norms.’ Capital iQ can help with  a Peer Analysis, M&A Transactions (comps), financials and more. Other databases (e.g., Mergent Online, D&B Hoovers, Osiris, Orbis also provide a list of potential peers/competitors)

However you must decide who are the appropriate competitors for your analysis; databases tend to be less specific.

Example, if your M&A target is a division of the company, you will want to limit your competitors to that industry; for example,  General Electric produces wind turbines among many other products and services, but General Electric is classified as an Industrial Conglomerate by by S&P NetAdvantage;  as a Digital Industrial Company by Mint Global and as Machinery and Equipment manufacturing company by D&B Hoovers. Some databases allow you to search in detail or by keyword (e.g., wind). You need to find the right companies for comparison. If you are familiar with an industry, sometimes you will know a key player or you can start with a 'pure play' company such as Vestas, who is involved in one industry; it will be easier to find similar competitors

Example: If you are doing research for the company, Constellation Brands, (a very large distributor of alcohol), you would need to decide if you are looking for other major distributors or if you are looking at specific markets (e.g., beer or wine or spirits).

Company Databases like those listed below (as well as other databases) will help you get started in building a list of competitors, market research reports will also help (see Buyers Industry tab).  Lists of both types of databases are listed above. 

  • Capital IQ use Screening function or if you know a specific company start there, and look at the Peer Analysis.
  • S&P NetAdvantage
  • Factiva select Companies/Markets tab, then Industry, then Industry Snapshot
  • D&B Hoovers - use build a list function

 

Using analyst/investment reports to find commentary and valuation estimates on Mergers & Acquisitions:

Investment analysts offer informed opinions on the value of a merger/acquisition. The database, Thomson ONE provides investment reports in addition to other financial news and data. However, it is your job to evaluate their opinions and other information contained in the reports. Analysts typically cover several companies within an industry - or perhaps other related industries. They are very knowledgeable about the companies and industries and often have very good relationships with the companies., and do a lot of research.  Analysts reports often subscribe to specialized research providers who can provide some hard to find information. One analyst may not agree with another so it is best to gain several perspectives.

A detailed guide on how to use Thomson ONE is available via the Financial Database Help Guides 

Please note: Thomson One is only available via Internet Explorer 8, 9, or 11

A few tips for finding reports that review a M&A investment or post merger analysis:

  • Narrow your research by date, before the announced date, during the 'deal' and a year or so after the deal has closed.  
  • Search the 'text' with the analysis you are looking for, e.g. valuation, synergies, post merger, SOP or Sum of the Parts, post merger.  Note, Thomson ONE searching capabilities is not Google like, it will search for key words and provide you with the number of times the word appears. You can rank the results (e.g Sort by Keyword Relevance) but it is not always accurate!
  • Check the box: Remove Non-Broker Research to remove reports that are not written by investment bankers/investment analysts.  This will help refine your results to more targeted research reports.  Those with named analysts under the Analyst columns is also a clue.

 

This section will address:

  • Section D -  TERMS OF THE TRANSACTION
  • Section E - INITIAL REACTION TO THE DEAL - (1) Stock market reaction.
  • Section G - DEAL HISTORY, REACTIONS TO THE DEAL; 
  • Section H OTHER SIMILAR DEALS

Terms of the transaction (D) similar deals (H) and deal history (G) can be found on the following databases: 

  • Capital IQ - Provides Terms of the Transaction, Deal History.  Similar deals can be created easily; stock market reaction (stock prices before and after the deal can also be downloaded from Capital IQ.  See FINANCIAL DATABASES GUIDE, will see the link to the  Step-by-step  Capital IQ M&A Transaction Screening Guide
  •  
  • Zephyr - Provides Terms of the Transaction, Deal History; a list of similar deals can be generated. Using the Wizard will guide you through the process to create a report. 
  • Mergermarket - Use Intelligence tab to search for history of the deal; Mergermarket Intelligence provides the 'Story' check the box to download

You can find the reaction to the deal (E) in terms of stock price (before and after the deal) via any the following databases:

  • Capital IQ, via the See FINANCIAL DATABASES GUIDE , see page of the Capital IQ Company Basics guide. 
  • Mergent Online:  Search company you are looking for, once you are on the company page, select Equity Pricing tab, enter the applicable dates
  • Osiris: Search for company, once you are on the company page, you can select Stock Prices on the right (hover over Stock prices then select from the list of options), or from the options on the left, just below Peer Analysis, you will find some graphic icons, hover over that, and select from the options (e.g., Evolution of Stock Market Prices)
  • FactSet -See the FACTSET RESEARCH GUIDE   and refer to the getting started PDF, or enter company name and select from options, or search on company name + stock price. 

This will help you with SECTION B - BUSINESS ECONOMIC REASONS FOR THE TRANSACTION,  but you should also refer to the SEC Filings TAB; Section E - INITIAL REACTION TO DEAL: Section F - VALUE CREATION; Section G - DEAL HISTORY

Searching the press for articles and information is a PROCESS. You may have to perform several searches in a few databases to get the information you need.

Keywords: company names and terms merger, M&A, acquisition. If you are still getting too many 'hits,' try terms like success or fail; to determine INITIAL REACTION TO THE DEAL (Section D), use addtional keywords like value, or "value creation" valuation, expectations, expansion, strategy, synergy etc. (use quotes when searching two words as a phrase)  to learn about the expectations of the deal, both from the company's point of view and the press/experts. The press will also describe sme history of the deal; counter offers, terms, etc.

Database tools: most databases provide tools to refine your search.  You can limit your search by company name (or companies); you can narrow your search by date or date range,  you can also ensure the keywords can be found in the abstract of an article (e.g., eBay and Skype and merger); you would want to do this search 1-3 years after the close of the deal (specify a date range).

Sources: the keywords you select will include the name of the companies that your are researching (the buyer and the target); but the commentary by 'experts' will come from major newspapers like the New York Times, Finance Times or the Wall Street Journal; but also from industry publications (Barron's, Investor Daily, Acquisitions Monthly, Mergers & Acquisitions), but also business journals like Bloomberg's Businessweek, Forbes, Fortune, the Economist and others. Before you start to limit your search by publication, do the search first with keywords and a date range, usually that will get you what you need.

There are several databases that focus on business research, please find the links above.

  • ProQuest Business
  • EBSCO Business Source Complete
  • Factiva