M & A Analytics

June 23, 2016

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 Close
M&A Due
Diligence
Lifecycle Sign LOI

Shortlist

Profiling

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 Close
M&A Due
Due Diligence Diligence
Sign LOI
Process Shortlist
Finance

Process
Profiling
People

Technology

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 80% Time spent in Finance Due Diligence

Finance Others

M&A
Due Diligence
Process

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 Hewlett Packard Acquisition of Autonomy
“Smaller & Less Profitable than we
thought” – CEO Meg Whitman

$10.2 $ 8.8 Limited

$8.8 Billion Write-Off

Diligence
Lack of Proper Finance Due
$10.2 Billion Acquisition
Acquisitions Fail
- Lack of Proper Billion Billion Finance
Finance Due Acquisition Write-off Due
Diligence
Diligence

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 It’s all about the Trends & Outliers
Revenue How is the Revenue compared to the Mean for last 5 years and the Mean for each
year?
Trend
Percentage growth Month on Month, Quarter on Quarter

Percentage Variance & Outliers – Any sudden drop/increase?

Finance Due Cost Analysis Trend Analysis

Diligence Identify Outliers

Any sudden drop/spike?

Comparatives Compare account trends

Revenue Increased and did Headcount increase? Wages Cost increased and did
Revenue increase etc?
Automatic plot of relationships

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 Financial Statements/Trial Balance say a lot about
the Business

But………

Do not tell a

Finance Due story

Diligence Lot of manual Cannot

analysis uncover
required patterns

Do not
Tough to read recognize
relationships

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 M&A Analytics – Makes it all automatic & seamless

No  Out of box Correlation Patterns

Correlation
Patterns

M&A  All Automated Lot of manual Cannot

analysis uncover  Uncover patterns
Analytics required patterns

Do not  Hidden Financial

 Out of the box Tough to read recognize
Analytics relationships Relationships

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 M&A Analytics – Out of the box correlated Patterns

M&A Analytics
Correlated Patterns

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 M&A Analytics – Uncover Patterns

Equity Increase Leads to Cash Increase leads to Asset Increase

M&A Analytics
Uncover Patterns

Asset to Equity
Relationship

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 M&A Analytics – Hidden Relationships

Revenue to Headcount to EBITA relationships

Revenue Drop

M&A Analytics
Hidden Relationships

Revenue – Expense
Relationship

Expenses Drop
& Increase

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 M&A Analytics – Out of the box analytics

Completely Automated set of Analytics – More than 1000 dynamic reports

M&A Analytics
Out of the Box
Analytics

Value, Percentage & Percentile

> 300 Analytic Trend Reports > 600 Analytic Trend KPIs
Analytics

> 1000 Comparison Reports > 1000 Comparison Plots > 1000 Comparison KPIs

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 M&A Analytics – Correlation Analytics

Correlation is not Causation – but……..

M&A Analytics
Correlation is not
Causation

1. Correlation Analysis across Accounts

2. Automated Correlation Coefficients
• Does Revenue increase when Headcount increase
• Does Revenue increase when utilization increase
• Does EBITDA increase when Revenue increase, Expenses
decrease and Utilization increase
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 How does it work?

Set Advanced
Load 5 year TB Run M&A Generate
Analytics using
M&A Analytics + Stats
Oracle R
Analytics Analytics
How does it Work?

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 550 W Van Buren Street | Chicago, IL 60607 | (800) 229-8700
www.huronconsultinggroup.com
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