EduPristine Financial Modeling team has prepared a financial model based on the acquisition of Patni Computer Systems by iGate. You can get an excerpt of this news on The Economic Times.

US-based iGate acquired nearly 63 per cent stake in country’s sixth largest IT firm Patni Computer Systems for $1.22 billion.

iGate bought 45.6 per cent of the shares of the three founders of Patni – Narendra Patni, Gajendra Patni and Ashok Patni- along with the 17.4 per cent stake of private equity firm, General Atlantic.

The transaction was valued at approximately $1.22 billion, including the mandatory 20 per cent open offer made to the public shareholders of Patni.

The deal seemed good for Patni, which for the last two years (since the deal) had been undergoing a period of uncertainty, giving it a clear roadmap for growth and competing with the bigger players.

It was even better deal for iGate, since the combined entity was worth almost a billion dollars, which helped in swinging large deals in its favor.

Analysis:

The model is prepared in Excel to give an idea about how the investment bankers go with the analysis of mergers & acquisition deals.

Any merger analysis essentially comprises of following six steps:

  1. What ownership you get at what price?

  2. What mix of debt, cash and stock is optimum for you to pay?

  3. What is the impact on your company?

  4. Deal is Accretive or Dilutive?

  5. How your ratios fair with different prices you pay?

  6. What is the contribution of the target in the pro forma company?

Separate worksheets have been prepared for each of these six essential steps for your reference.