Project Summary:
Our aerospace and defense client was interested in competitively bidding for and purchasing assets from another A&D company. Our work covered several analyses including valuations, competitor assessments, bidding strategies, advice on likely strategies and outcomes, and antitrust and national defense issues. Our valuation and competitor assessment analyses included valuing different combinations of the target’s business units (defense, aeronautics systems, and automotive parts) from the perspective of each “bidder” for the target’s assets. The valuations included components for cost synergies, strategic synergies, possible effects from differences in cost of capital and debt ratings, and defensive values (preempting competitors from acquiring the target). Our analysis of bidding strategies included development of a game theoretic model of behavior and a practical tool used to characterize likely bidding strategies of the players involved as well as sensitivities to various assumptions and to probabilities of events occurring. The actual outcome was remarkably very close to our predicted outcome.