sum of the parts

Investment Banking Slide Examples of Sum of the Parts

Tl;dr: Part of a collection of real examples of M&A investment banking slides. This blog covers Sum of the Parts. See the PowerPoint presentations investment bankers are paid millions for. No matter your job, or your aspirations, you can learn from these slides.

This is part of a collection of 67 free M&A presentations from the top 20 banks (based on ranking, and also the quality of presentation for you to learn from).

Collection of M&A slide examples

The main page for all the M&A resources is here.

I have broken out 827 examples of slides across 32 sections. You can click through to the section you want to learn about next here:

Company Overview
Corporate Structure
Management Projections
Research Analyst
Comparison Financial Projections
Analysis At Various Prices
Share Price Analysis
Volume Weighted Average Price
Regression Analysis
Discounted Cash Flow
Weighted Average Cost Of Capital
Comparable Companies
Comparable Transactions
Dividend Discount Model
Leveraged Buy Out
Premiums Paid
Sum Of The Parts
Football Field
Executive Summary
Offer Summary
Offer Comparison
Accretion DilutionĀ 
Exchange Ratio And Contribution Analysis
Shareholder Analysis
Ability To Pay
Strategic Options
Transaction Case Study
Next Steps
Full valuation
Sales Pitches

Is this blog for you?

Why the heck should you care? Investment banks (historically) attracted the best and the brightest.

  • Slide structure/design: Learn how complicated concepts are structured and designed in PowerPoint
  • Analysis approach: See exactly how complex financial methods are presented
  • Strategy and communication: M&A deals are not (normally, other than many Duff and Phelps decks) cookie cutter. There’s a host of topics that need to be dealt with
  • Morbid interest: I used to do this for a living, but it’s still interesting to see how PPT are made… but then maybe it’s just me and so FML šŸ˜‰

Who this will help:

  • You want to work in banking: There’s a lot of applicants. Knowing the job helps you answer questions
  • You work in banking: Even if you’re an MD, you need to know how the best are structuring their thoughts/analysis
  • You write presentations: You can’t buy learnings like this. You can learn from the slides
  • You have a curious mind: Good for you

About Sum of the Parts

You basically always write this like SotP for shorthand. I don’t know why but I write it like SoTP, but I’m probably just weird.

You only will and can do this analysis with a big ass company that does lots of different things. Why? Well, if you are an asset manager and that’s all you do- you’re a pure-play AMC. You do the usual valuation stuff.

Now let’s say you’re a big dumb conglomerate that entered into all sorts of random ass business lines? Well, you’re not doing just one thing, you’re doing a lot of things. So how do you value yourself? Maybe you sell tacos, DVDs, and had a weird foray into space! That’s three totally different things. Are you going to value the business based on asset management multiples? Nope. Are you going to value all the revenue on a space multiple? Nope. Doesn’t it make sense to break up the company into three parts and value them separately? Yeah it does.

The SoTP analysis can be thought of as a “break-up” analysis because you could sell off all the assets individually and potentially make more money. So with this analysis all you do is value each lego brick, add it up, and come up with a range of potential valuations.

Two real examples would be:

  • Defending your client that is trading at a discount to the sum of its parts from an activist hedge fund so you can tell your investors you’re undervalued and the HF is a poo poo face
  • Or if you are a PE firm, deciding to take it over, restructure and sell off the parts to unlock the value of a business segment that is not getting credit for its value through a spin-off, split-off, tracking stock, or equity (IPO) carve-out. Here you would be talking about the “look through value”

I can remember churning out a year’s worth of pitch decks for one of the largest insurers in the world about another of the huge ones. My director wanted to sell the idea of a “starburst” where the potential client would buy the competitor, keep the bits they wanted (for x strategic reasons which involve synergies) and then sell off all the other parts to whoever else. That’s a huge sell, to be honest, and the deal never happened.

You will likely find yourself doing a SoTP at some point, but it’s just another thing you have to do. It’s very unlikely you’re going to actually do a start burst given the risk involves.

Why these slides are made

There are two scenarios when you will do this:

  • Another analysis to do: The client is demanding of the director has something to prove and you are in a slaughterhouse where you are just making analysis and decks
  • Selling the dream: Your Director is pitching for fees and is selling the dream for a deal that probably won’t happen

You will read about SOTP a lot though as equity research analysts do these analyses in broker notes all the time.

If you know how to do valuations, then this is just more of the same shite. Rather than just doing one analysis, you have to do this 5 times.

Comments on making these slides

Again, if you know how to do the usual valuation stuff, you just have to learn a little about how to present the analysis. This isn’t that complicated, but yeah, cancel your Tinder dates.

Examples of Sum of the Parts

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