Structured M&A Process – academic theory meets practice

Apart from operating successfully in the area of investment banking, MP is also active in the academic world. For several years now MP hosts, together with Prof. Dr. Stefan Bogner from the University of Business and Economics Vienna (WU), the lecture ‘Structured M&A Process’. This course is intended to give insights into the daily business of M&A professionals and let you apply the techniques learned at university in the simulation of a fictitious M&A project.

But before I get into the details, I would like to briefly introduce myself. My name is Stephan, I am 24 years old and started working for MP as an analyst in September 2020. I was born and went to school in beautiful Burgenland before I moved to Vienna to study business administration and law. From the very beginning, I was interested in investment banking and M&A, which is why it was a ‘no-brainer’ for me to sign up for MP’s project seminar during the last semester of my master studies.

Overview

Since the project seminar aspires to simulate an M&A process as close to reality as possible, the participating students were divided into three teams: A seller team and two buyer teams, one representing a strategic buyer and the other a financial investor. The topic of the first unit was, besides a (virtual) getting to know each other, the introduction to the companies assigned to us. Full of energy and curiosity, the following three units provided us with deep insights into the topics of research, documentation, and valuation – let alone the opportunity to dive into exciting and heated negotiation rounds with the other teams to get the deal done. But enough of beating around the bush, let’s jump right into the first lecture:

Target- & Buyer-Approach

As the seminar covers the complete M&A process, from preparation & documentation to signing & closing, the aim of this lecture was to identify suitable candidates in the form of a long list and those with the best fit were selected for the shortlist. In order to give our clients a clear overview of the most important data of the target company, we created short profiles, which not only provided information about the financial situation but also clearly depicted the product range and the company’s (technical) capabilities. A seemingly simple task, but due to the abundance of important information, a consistent focus on the most important things was indispensable.

Indicative Offer

The next step was to draft the Letter of Intent (LOI). In addition to highlighting the strategic potential, this also involved a valuation of the target company. In addition to a CCA and CTA multiple valuation, we performed a DCF analysis. Furthermore, the most important aspects regarding the structure of the transaction as well as the further procedure were, among other elements, proposed in the LOI.

Due Diligence & Share Purchase Agreement (SPA)

As in a real-world transaction, the due diligence of the target company was not to be missed. The findings that were made visible included both tax and commercial topics, but also potential deal breakers with regards to environmental issues. These findings had to be covered in the SPA to protect our respective clients. In addition, transaction elements such as earn-out and retentions clauses as well as important aspects such as the closing mechanism were submitted in a SPA draft to the buyers, who then provided their respective views through a mark-up to the SPA draft.

Negotiation

This mark-up was the subject of negotiation in the last meeting. It is in the nature of things that, depending on which side you represent, there are different ideas and perceptions regarding the final version of the SPA. Although we were all of course aware that this was only a simulated negotiation, it resulted in intense negotiations and exchanges of ingenious arguments, as everyone wanted to get the best possible result for their respective client. But don’t worry – we’re all still friends 😉

Conclusion

I can safely say that this seminar was one of the best courses during my entire time as a student. Besides the many insights we gathered about M&A processes, it was incredibly fun to work together as a team, supporting, but also challenging and pushing one another to new levels. The course instructors, David Gabriel and Alexander Kubo, were always on hand to provide the teams with useful feedback and real-world examples. Looking back, I can say that the seminar certainly made a big contribution to bringing me closer not only to M&A but also to MP as a company. It was therefore even nicer to finally be welcomed by a fantastic team at MP.

I hope I was able to give you a little insight into the project seminar organized by MP. My colleague Moses Neukart, who also attended this course, joined MP as an analyst as well. He describes his experiences about the transition from university into investment banking in this blog post. So make sure to check it out!