Companies make acquisitions for two primary reasons: (1) to fill a strategic gap (products, resources (people), or capabilities) or (2) enable the company to enter a new market with a new revenue stream. Researching a company’s M&A activity provides insight into the corporate strategy. When researching a specific deal, we are often looking for deal financials and deal valuation. It’s also important to research the strategies behind the deal. We often want information on business drivers, overall strategy, execution plan, implementation, etc.
Let’s take a well-known deal as an example, eBay’s acquisition of Paypal. In 2002, eBay, the largest online auction platform bought, PayPal, a web-based payment service, for $1.5B. The deal was a perfect match – Paypal drove eBay’s revenues while eBay supported the growth of PayPal’s active user base. A decade later, it is evident that both businesses fueled each others growth. So how does one research a specific deal?
Start with Thomson One for deal information including deal financials, news, filings, and research.
Go to Screening & Analysis => Deals & League Tables => M&A => Advanced Search.
Select your criteria (e.g. Company Info => Name => Target => Paypal). Then click Preview. Click on the icons next to the deal to view the tearsheet and additional information. Below is a small portion of the deal tearsheet.
In addition to the analyst reports you can get from the Research tab, go to Screening & Analysis => Research => Research Search. For analyst reports on this deal select eBay as the company. Then search forPaypal in the Title/Text field under ‘More Options’. Change the date range to closer to the deal date.
For filings (ARS and 10-K) go to Company Views => Filings => Company Filings.
Zephyr, a part of the BvD suite of databases, contains data on M&A activity, IPOs, joint ventures and private equity deals with links to detailed financial company information. Use the default search option to search for eBay and Paypal, then select the deal from the list of results.
You can get similar deal information here, but in addition to deal financials is a section on ‘Deal comments & rationale’ where you can find qualitative information like this quote from eBay’s CEO, Meg Whitman:
“EBay and PayPal have complementary missions. We both empower people to buy and sell online. Together we can improve the user experience and make online trading more compelling. We can also capture greater value from the e-commerce opportunities occurring both on and off our site.”
In addition to searching within databases that specifically cover M&A, searching the literature will be helpful too. Look for articles that discuss the deal from around the time that the deal took place. For articles about the merger use Business Source Complete. This is a business journal article database covering both trade, general business, and scholarly journals.
Here you will want to search for the company names in the CO Company Entity field and use the subject heading CONSOLIDATION & merger of corporations. When viewing the results, use the left-hand menu to adjust your date range. For example try a search like:
ABI/Inform is another business journal article database that you can search. This database is similar to Business Source Complete, but contains unique content as well. Use similar search techniques, but use the subject heading acquisitions & mergers.
Use Factiva to find news articles about the merger.
Go to Search => Search Builder. For this example, you might try a search like:
- Select eBay as the Company
- Select Acquisitions/Mergers/Takeovers as the Subject
- Search for Paypal in the Free Text Search Box. Select to search for free text terms in the Headline or Lead Paragraph under ‘More Options’
- Adjust your date range to closer to the 2002 deal
For additional information see our Business FAQ “Where do I find info on mergers and acquisitions?” as well as our previous posts on Zephyr, Bloomberg’s M&A database, and M&A Rumors.