M&A + PE Framework

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 Week 2 - Mergers and Acquisitions & Private Equity 

made using Xmind

In the case of Didi merging with Kuaidi, they both had similar business models, attract more funding from consumers, find the same advisory to stop price war, eliminate major competitors, have higher pricing power. 

Microsoft acquired Linkedin and noticeable interest in professional development customers, and microsoft noticed linkedin stock price was very low ($194/share) and climbed in 2016. 


How to tackle a case interview for M&A case
Always think about the changes in the business model (Is chatgpt changing the way people are searching/ potential to displace google?)

Synergies (financial synergies) - are there bundles sales? How to control production and access production to save cost? Warehouse and salesforce sharing to boost profitability is a strategy. Management style and culture might be different. 
Risks mitigation is dealing with regulation/antitrust issues earlier on
Opportunity costs could be mentioned in the “acquisition details” bucket. Culture could be something to talk about in terms of risk, i.e. as part of a “Risk” bucket. For example, if a big market player acquires a “unicorn”-type company, there could be a perceived difference in cultures that could lead to a negative market reaction. 
“Synergies” as a category is still focused on the target company — you are analyzing the financial and non-financial aspects of the target company and subsequently making judgments regarding their synergistic potential

What is Private Equity


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Note: you will only ever be asked to calculate perpetuity NPVs (i.e., calculate the NPV of an investment over a “perpetuity” or unlimited time frame). Under the simplest circumstances, you can calculate that simply by taking the annual revenue divided by the discount rate, then you can subtract the initial investment cost to get the NPV.


Bain Capital acquired Canada Goose 10 years ago in portfolio, top 10 PE firm in the world. Now market capital of Canada goose is $2.5B CAD compared to 250M CAD for 70% shares in 2013. Strategy may to sell IPO for higher cost to other firms.

Upstream selling is to sell to suppliers, downstream selling is to sell to customers (Peanuts company sold to Trader Joe's)




General structure revisited:











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