题目内容

The output of M&A models is only as good as the accuracy and timeliness of the numbers that are used to create the model and the quality of the assumptions used in making the projections.

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When the target firm is an operating division of a larger firm, it is common for the parent to provide services to the target at below market prices. In calculating the target's standalone value, it is necessary to subtract the difference between the market price of these services and actual cost paid to the parent from the target firm's net income.

Projecting as many of the key income, cash flow, and balance sheet components as a percent of projected revenue helps to ensure the internal consistency of the model.

Common size financial statements are useful for comparing businesses of different sizes in the same industry at different points in time.

In order to normalize the historical financial data of the target firm, it may be necessary to subtract large increases in and add back large decreases in non-recurring expenses from operating profits.