Build an M&A Model - Google Acquires LinkedIn

Overview This exercise guides you through building a simplified M&A model for Google’s acquisition of LinkedIn. You will practice evaluating the impact of the transaction on earnings and deal value by completing the financial projections, sources & uses, and accretion/dilution analysis. The exercise focuses on understanding how the combination of two companies affects the acquirer’s earnings per share (EPS) and overall transaction economics. Key steps include projecting financials, estimating debt and D&A, and performing an accretion and dilution analysis. Learning Goals Understand transaction mechanics: Complete the Sources & Uses section to see how the deal is financed and allocated. Project post-transaction financials: Forecast the impact of new debt, interest, and incremental D&A on the pro forma EPS and Income Statement. Analyze accretion/dilution: Evaluate whether the transaction increases or decreases EPS (Dilution / Accretion), and perform sensitivity analysis to understand how deal assumptions affect the outcome. Key Concepts Accretion: Measures the positive effect of an acquisition on the acquirer’s EPS. Dilution: Measures the negative effect of an acquisition on the acquirer’s EPS. Sensitivity Analysis: Examines how changes in deal terms (e.g., stock % or offer price) impact accretion/dilution outcomes. Pro Forma EPS: The projected EPS after the transaction, including effects of new debt, D&A, and synergies. Sources of Funds: Tracks where the financing for the acquisition comes from (e.g., cash, debt, or stock issuance). Uses of Funds: Shows how the capital is applied, including purchase price, fees, and debt repayment. Asset Write-Up: Adjusting the target’s assets to fair market value, which affects depreciation and amortization in the pro forma model.

Practice Build an M&A Model - Google Acquires LinkedIn with interactive Excel modeling exercises in our M&A Modeling module.

This hands-on modeling exercise helps you master Build an M&A Model - Google Acquires LinkedIn through real-world Excel practice and financial modeling techniques.