--- name: ma-deal-valuation-analyzer description: "Runs a three-method M&A valuation — DCF, comparable companies, and precedent transactions — then produces a triangulated valuation range, implied multiples, an accretion/dilution summary, and a sensitivity table across discount rate, growth, and synergy capture. Use when valuing an acquisition target, pressure-testing a proposed offer price, preparing a board or investment committee valuation memo, or assessing whether a deal is accretive or dilutive to EPS." argument-hint: "[target-financials] [deal-terms]" allowed-tools: ["Read"] --- # M&A Deal Valuation Analyzer ## Purpose Produce a defensible valuation range for an acquisition target by triangulating DCF, comparable company, and precedent transaction analyses — then translate the range into implied multiples, an EPS accretion/dilution verdict, and a sensitivity map that shows exactly which assumptions move the answer. Replaces the scramble of building three models from scratch under deal deadline pressure. ## When to Use Invoke this skill when the user asks to: - Value an acquisition target or estimate a fair purchase price - Pressure-test a proposed offer or bid before submitting it - Prepare a valuation section for a board deck or investment committee memo - Determine whether a deal is accretive or dilutive to EPS - Compare an offer against trading comps and recent M&A transactions - Understand which assumptions the valuation is most sensitive to ## Inputs Required Before starting, collect: - **Target financials**: Revenue, EBITDA, EBIT, net income, D&A, capex, and working capital for the last actual year plus any available projections (3–5 years preferred) - **Deal structure**: Proposed purchase price or offer range, cash/stock mix, and assumption of net debt - **Acquirer profile**: Acquirer's share price, shares outstanding, cost of debt, and marginal tax rate (needed for accretion/dilution) - **Comparable set**: Names of public comparables and recent precedent transactions if known — otherwise the industry/sector so a representative set can be inferred - **Synergy estimate**: Expected annual run-rate synergies (cost and/or revenue) and time to full capture - **WACC inputs or estimate**: Discount rate, or the components (risk-free rate, beta, equity risk premium, cost of debt) to build one - **Terminal assumptions**: Long-term growth rate and/or terminal EBITDA exit multiple If projections, WACC components, or a comparable set are missing, build reasonable defaults from the sector, state each assumption explicitly, and mark them for the user to confirm. ## Instructions ### Step 1: Normalize the Target's Financials Before valuing, clean the base. - Adjust EBITDA for one-time items, owner compensation add-backs, non-recurring costs, and any pro-forma standalone adjustments - Reconcile enterprise-to-equity bridge components: net debt, minority interest, preferred, and unfunded pension - State the base-year metrics that all three methods will reference (Revenue, adjusted EBITDA, EBIT, unlevered FCF) - Flag any figure that is estimated rather than provided ### Step 2: Discounted Cash Flow (DCF) Build an intrinsic value from projected cash flows. - Project unlevered free cash flow for the explicit forecast horizon (default 5 years): EBIT × (1 − tax) + D&A − capex − Δ net working capital - Discount each year at WACC; state the WACC and how it was derived - Compute terminal value using **both** methods and reconcile: Gordon Growth (perpetuity) and Exit Multiple (terminal-year EBITDA × exit multiple) - Sum discounted FCF + discounted terminal value = enterprise value; bridge to equity value - Note the terminal value as a % of total EV (flag if above ~75% — signals fragile assumptions) ### Step 3: Comparable Company Analysis (Trading Comps) Anchor to how the public market prices similar businesses. - Select 5–8 comparables matched on sector, size, growth, and margin profile; state the selection rationale - Apply the relevant multiple set: EV/Revenue, EV/EBITDA, and P/E where appropriate - Present the range as low / median / high multiples across the set - Apply median and 75th-percentile multiples to the target's metrics to derive an implied EV and equity value range - Note whether the target should trade at a premium or discount to the median (based on growth/margin) and adjust ### Step 4: Precedent Transaction Analysis Anchor to what acquirers have actually paid. - Select 4–6 relevant M&A transactions in the sector from a comparable timeframe; state each rationale - Use transaction EV/EBITDA and EV/Revenue multiples (these embed control premiums) - Note the implied control premium vs. trading comps (typically 20–40%) - Apply the precedent multiple range to the target to derive an implied valuation range - Caution where market conditions at the time of a precedent differ materially from today ### Step 5: Triangulate the Valuation Range Reconcile the three methods. - Present a football-field summary: the value range from each method side by side - Identify the overlap zone and state a recommended valuation range (low–high) - Weight the methods explicitly and justify (e.g., precedents weighted higher for control situations, DCF higher when comps are thin) - Compare the recommended range against the proposed offer price and state whether the offer is below, within, or above fair value ### Step 6: Implied Multiples Check Translate the recommended price back into multiples. - Show implied EV/Revenue, EV/EBITDA, and P/E at the offer price - Benchmark these against the trading comps median and the precedent transaction median - State whether the implied multiples are defensible or stretched ### Step 7: Accretion/Dilution Analysis Determine the EPS impact to the acquirer. - Compute pro-forma net income: target net income + after-tax synergies − incremental interest on acquisition debt − foregone interest on cash used - Compute pro-forma share count: acquirer shares + new shares issued (for any stock consideration) - Pro-forma EPS = pro-forma net income ÷ pro-forma shares; compare to acquirer standalone EPS - State the verdict: accretive or dilutive, by what % and in what year - Identify the breakeven synergy level required to reach EPS neutrality ### Step 8: Sensitivity Analysis Show what actually moves the answer. - Build a WACC × terminal growth sensitivity grid on DCF equity value (at least 3×3) - Build a synergy capture × purchase price grid on Year-1/Year-2 accretion/dilution - Identify the two or three assumptions with the largest swing in outcome - State the "break points" — the assumption level at which the deal flips from accretive to dilutive or moves outside the fair-value range ## Output Format - **Structure**: Sequential valuation sections, each with the method's inputs, calculation logic, and resulting range; football-field triangulation; accretion/dilution table; sensitivity grids - **Length**: 1,100–1,500 words - **Format**: Structured document mixing concise prose with tables for multiples, the football field, accretion/dilution, and sensitivity grids - **Sections**: Normalized financials → DCF → Comparable companies → Precedent transactions → Triangulated range → Implied multiples check → Accretion/dilution → Sensitivity analysis → Key risks and recommendation - **Tone**: Corporate development director — precise, numerate, assumption-transparent; states a view rather than hedging, and always separates fact from estimate ## Quality Checklist Before delivering output, verify: - [ ] All three valuation methods are completed with a stated numeric range for each - [ ] Every material assumption (WACC, growth, exit multiple, synergies) is stated explicitly and any inferred values are flagged - [ ] DCF terminal value is computed via both perpetuity and exit-multiple methods and reconciled - [ ] Comparable and precedent sets each cite the specific names or a stated rationale — not a generic "industry average" - [ ] Accretion/dilution states a clear verdict, the % impact, the year, and the breakeven synergy level - [ ] Sensitivity analysis identifies the specific break points where the deal flips accretive/dilutive or exits the fair-value range ## Notes - Terminal value dominating DCF (>75% of EV) is the most common source of a false-confident valuation — surface it every time - Precedent transactions embed control premiums; trading comps do not — never blend the two ranges without accounting for this - The most decision-relevant output is usually the sensitivity grid, not the point estimate; a valuation "range" that ignores which assumptions drive it gives boards false precision - If synergy estimates are provided by the deal team, present the analysis both with and without synergies — deals that only work on synergies carry the most execution risk --- ## How to use this skill This file is a Claude Code skill in [Anthropic's standard format](https://docs.anthropic.com/en/docs/claude-code/skills) — markdown with YAML frontmatter at the top. **Installing in Claude Code:** - `~/.claude/skills//SKILL.md` — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects) - `/.claude/skills//SKILL.md` — auto-loads only when working in that project (recommended for project-specific skills) Restart Claude Code or open a new session to register. **Using in Claude.ai, ChatGPT, Gemini, or other AI tools:** 1. 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