Speaker 1: M&A model. Let's take a look at the components of CFI's M&A model. It has all the standard components of a 3-statement and DCF model. In addition to that, it's got operating scenarios for both the target and acquirer companies. It's got a consolidation model, or pro forma, that combines the businesses. It also has transaction assumptions such as synergies, financing, takeover premium, sources and uses of cash, and many other things. It performs accretion and dilution analysis to assess the impact of per-share metrics. It has sensitivity analysis to see how sensitive the model is to changes in inputs. Finally, it calculates the internal rate of return of making the acquisition and assesses the potential share price impact for the acquirer. Let's look at the purpose of the M&A model. Why should it be used? Well, it should be used to value a target business, to determine how much to pay for an acquisition, to compare forms of consideration such as cash and shares, as well as to evaluate synergies and takeover premiums, and assess the net impact of the acquisition on the acquirer. Relevant courses for this model include business valuation modeling and the M&A modeling course, which teaches you how to build the model step by step. Let's look at the model and explore it in more detail. Here we are inside the M&A model. We're on the cover page, and as you can see, there are several other sheets inside this workbook. They're outlined in the table of contents. The easiest place to start is with the target model. The target model, if we open up all the sections, we've got operating assumptions at the top, then an income statement, balance sheet, cash flow, and supporting schedules, followed by a DCF model. Let's move over one tab to the acquirer model, and if we open up all the sections here, what you'll see is the same layout and structure as the target model. It's got the income statement, balance sheet, cash flow, supporting schedules, and DCF, and it actually mirrors exactly to the target model. In the course, we show you how to make the two financial statements match, and what that does is it allows us to easily consolidate the acquirer and the target into one pro forma model. But before we explore the pro forma model, let's move over to the deal assumptions. Let's open it up, and here we have all the transaction assumptions. We have operating scenarios here, and financing scenarios. We've got sources and uses of cash, goodwill and purchase price allocation here, and all of these assumptions, plus the target and acquirer models, enable us to create a closing balance sheet. The closing balance sheet takes the acquirer and the target, makes all of these adjustments based on the assumptions up top, and arrives at a consolidated balance sheet. The consolidated balance sheet then allows us to drive the pro forma model. So the full pro forma model, as you can see here, is based on the closing balance sheet. So essentially, you start with the target model, then you have the acquirer model, you combine those with assumptions, and create a pro forma model. Once the pro forma model is built, we can perform the accretion dilution analysis, which is on this worksheet here, and we can see what the impact is to key per share metrics such as earnings per share, cash flow per share, and the actual share price itself. This advanced M&A modeling course will teach you how to build a model step by step from scratch. In terms of how to actually use the model, once it's built, you can start experimenting with scenarios. We're currently running scenario 4, which is pulling all of this information here, including a 25% takeover premium and 50% cash consideration. If we scroll down to see what the pro forma impact is on the intrinsic value of the business, we see that this is actually slightly accretive to the acquirer by 6.4%. Let's change the scenario. Let's select from the drop-down list scenario number 2. In scenario number 2, we have a smaller takeover premium, but a lower cash consideration. Let's scroll down and see the impact on share price. We can see that this is actually a higher expected outcome for the company, so it would prefer scenario 2 over scenario 4, all else being equal. You can see how once this model is built, it can be a powerful tool for performing scenario analysis and sensitivity analysis on this M&A transaction.