In this course you learn about valuation models for acquisitions and divestitures, including the linkage between business plans and valuation. We start with the core determinant of value, the discounted cash flow (DCF) model, and related valuation techniques - Leveraged Buy-out (LBO), Accretion / Dilution Analysis, Return on Invested Capital and Internal Rate of Return, Payback Period - that leverage the tenets of the DCF. You triangulate the conclusions of the DCF-based models with other valuation techniques and financial projection metrics, including Comparable Transaction Analysis and Comparable Company Analysis.
Further, we examine the critical linkage between the business plan and the valuation model and how your assumptions about the former drive the latter. Within this section we employ tools used by Wall Street analysts to quickly build scenario analyses. We also explore emerging valuation techniques that will allow you to tailor your investment returns to the capital structure of your particular acquisition.
REVIEW QUESTIONS: Acquisitions and Divestitures: Financial Modeling and Valuation
FINAL EXAM: Acquisitions and Divestitures: Financial Modeling and Valuation
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Patrick Garvey is president and founder of Emerald Strategic Advisors, whose mission is to help medium and small businesses sell or recapitalize their business and to assist acquisitive businesses with their acquisition activities. Emerald’s current clients include a software company seeking capital or partners for U.S. expansion and a service company seeking to improve their financial planning and reporting. Most recently, Pat helped Sears Holdings execute the spin-off of retailer Lands’ End.
Pat has over 25 years of experience in M&A, Finance and Strategic Planning with companies ranging from large to start-up, including Thomson Reuters, Wolters Kluwer, Tribune Company, and CCC Information Services. Pat’s passion is M&A and Business Planning, working with business leaders and subject matter experts within and outside of the client’s organization to build comprehensive business plans rooted in strategy and sound financial and business judgment.
Pat served with distinction as Director of Corporate Development for Wolters Kluwer from 2005 – 2013, having earned the company’s coveted “Achievement Club” recognition multiple times (a rare achievement.) He was charged with executing on strategic software and publishing acquisitions and divestitures for a $1.0 billion division, as well as strategic planning for the division. His M&A responsibilities included sourcing targets and buyers, financial analysis, business modeling, business case preparation and presentation, valuation (discounted cash flow, leveraged buy-out analysis, return on invested capital, payback, comparable company, comparable transaction,) strategic analysis, price and terms negotiation, legal review and post-transaction integration. Pat also provided oversight and counsel on other strategic investments within the company (including partnerships and alliances and new product investments) and served on number of special project teams that transformed the business, including outsourcing/offshoring initiatives.
Prior to joining Wolters Kluwer, Pat worked for Thomson Reuters in senior management roles overseeing financial planning and analysis. He led business case development and integration activities for several key initiatives and acquisitions, including the multi-billion dollar acquisition of West Publishing, which became the cornerstone of Thomson Reuters’ strategic shift to electronic publishing and software from print publishing. He also led several key task force teams, including acquisition integration projects and organizational change initiatives.
Prior to joining Thomson Reuters, Pat served in senior financial management and operational roles for a pioneer in the electronic encyclopedia business and for an innovative, start-up software company. Both companies were game changers in their industry, and grew rapidly under Pat’s stewardship.
Pat has a BA in Accounting and an MBA in Finance from Michigan State University. Pat stays up-to-date with current M&A activities in the middle market as an active member of the Association of Mergers and Acquisition Advisors, obtaining the Certified Mergers and Acquisition Advisors certification in November, 2011. Pat teaches a portion of the certification class and leads panel discussions on acquisitions from a Corporate Development perspective. He is also a member of the Financial Executives International.
Expertise: Business Planning, M&A, Business Valuation, Business Modeling, Strategic Planning, Process Improvement, Outsourcing/Offshoring, International Business, Financial Reporting.
Industries: Software, Publishing, Online Services, Telecommunications.
Pat and Kathy have been married 17 years and have a 13 year old son, Jack. Pat enjoys coaching Jack’s sports teams, an occasional round of golf, eclectic books, and travel. Pat is also active in his community, currently serving as Treasurer for the Village of Kenilworth, Illinois.
President : Emerald Strategic Advisors - [2014-03 to Current]
Leads medium and small businesses toward selling or recapitalizing their business, assists acquisitive businesses, and provides business planning, analysis and reporting consulting.
• Financial consulting to Lands’ End to execute on their spin-off from Sears Holdings.
• Improved financial reporting for a small project labor provider.
• Advisor to an overseas software company seeking partners and capital for U.S. expansion.
Director, Corporate Development : Wolters Kluwer - [2005-01 to 2013-03]
Led M&A teams in all facets of acquisitions and partnerships: Identified and prioritized candidate companies, analysis of financial statements, valuation, strategic fit, terms negotiation, board proposal, final due diligence and integration.
Expertise in valuations: Discounted Cash Flow (DCF), Precedent Transactions, Comparable Companies, Payback, Internal Rate of Return (IRR), Return on Invested Capital (ROIC), Accretion/Dilution, and Leveraged Buy-out.
Business case development, incorporating a comprehensive business plan and strategic analysis, taking into account not only the Financial, Legal and Tax aspects, but also Synergy Realization/Process Improvement, Strategic Fit, Marketing, Sales, R & D, Operations and Management.
International and domestic M&A (including India, Australia, New Zealand, Europe, Canada and South America.)
Ensured financial targets were met through thorough, detailed due diligence and post-acquisition integration activities.
Director, Financial Planning & Analysis : Wolters Kluwer - [2002-03 to 2005-01]
Budgeting, forecasting and financial reporting.for a $600 million division.
Manager, Finance : Thomson Reuters - [1995-02 to 2001-04]
Various managerial roles in financial planning and analysis. Developed and implemented FP&A systems and processes. Implemented ERP systems. Developed business case models. Financial support for sales and marketing, including sales planning, compensation plans and related activities.
Director, Operations and Administration : Compton's - Tribune Company - [1992-03 to 1995-01]
Financial planning, budgeting, reporting and operations for a small business start-up.
Finance Manager : CCH Information Services - [1990-03 to 1992-09]
Finance manager for start-up software business, CCC Autobody Systems. Budgeting, forecasting, financial reporting and operations (order management, A/R, customer service.)
Master of Business Administration, Finance : Michigan State University - [1984 to 1986]
Bachelor of Arts, Accounting : Michigan State University - [1980 to 1984]