Case Study

Question 1

Benefits of M&A

Answer 1

Can develop a brand name that may not be possible with organic growth, keep strong relationships with existing suppliers
Synergies - cost cutting through economies of scale, revenue synergies from greater market share, cross-selling

Question 2

M&A Risks

Answer 2

Common risks - Culture clash, employees may leave. Needs to be a careful integration with good communication as culture is set from the top down

• Miscalculating synergies
• ## Overpayment

Question 3

Net Debt & Net Debt/EBITDA

Answer 3

Long term + short term debts - cash and cash equivalents

Net debt/EBITDA used to show how firm could pay off current debt if ebitda and debt stay consistent.

Multiples of 4-5x and higher suggest it cant take more leverage

Question 4

Calculating EBITDA from income statement

Answer 4

Operating Profit + depreciation & amortisation

Question 5

Case study structure

Answer 5

Whilst this was the option I chose, I’ll first run through the alternatives and why I did not choose these

Question 6

Clothing acquisition

Answer 6

LVMH acquire Tiffany for $16bn