1 + 1 > 2

If you believe in something hard enough, it might just be true!

I clearly remembered my earlier days in Corporate Finance when I just joined the corporate world a year and a bit ago, and specifically during the time when the company was at its final stages of completing a deal. The crazy hours of getting in to the office before the sun was up, and going home when the moon was nearly done completing its ‘round’ – just before the sun is due to come up the next day. I forgot how a normal day feels like, not to mention the weight I lost! Good times. Today, my system has gotten used to it, so I gain weight instead when I’m stressed, reason being because I’ll give in to a truck-load of chocs.

First two words I learned were Merger and Acquisition. Having had an awesome team, they never fail to make things fun and simple for me, it’s really funny when I come to think about it all over again. “Acquisition is when company A ‘eats up’ or ‘swallows’ Company B” and “A merger is when Company C and Company D think that they can be a new set of BFF” and “both would take place if one or both the companies see potential benefits in the activity”…to gain a greater market share or to achieve greater efficiency. Simply put, the difference lies in how the purchase is executed - if it is a hostile act, then it’s an acquisition, if it’s a friendly one, it is a merger. Well most of the time.

So, 1 + 1 = 3? Why? Because all mergers and acquisitions are meant to create synergy that makes the value of the combined greater than the sum of the two parts at the end of the day. Ok la, maybe it's more logical to say 1 + 1 > 2? So mathematically, it can even be 1 + 1 = 8! Whoa, suddenly I feel like a genius teaching people that an obviously wrong answer, when justified can seem right :P All you need is a vivid imagination!

Those earlier days in the corporate world when everything was new and I was so eager to learn the most complicated things, the process of conducting a valuation to name one, using the different methods. One that is often used was the discounted cash flow. A very powerful tool if mastered correctly. At the same time that it is tricky, it is also 'fun' to measure how much a company is worth. I'm no pro investment banker, but I have to say that it was truly a very mind-enlightening first hand experience eventhough it was tough. Afterwards, I get to 'play around' with the numbers derived and calculate the minimum value of synergies which is needed  so that the acquiring firms do not lose value. Toss in those numbers in the magical equation (which has been stuck in my head since day 1) and tada! Well, obviously la it won't be accurate to the decimal, since like I told you, I'm no pro banker and everyone knows that when doing valuation, it is based on a list of assumptions too. 

The recent Hong Leong and EON deal is finally sealed. If you have not yet heard it yet, the town’s talking about RHB’s future? Who is it getting married to? Or would they remain alone?

*jeng jeng jeng*

Can you imagine, following the proposed sale of Abu Dhabi Commercial Bank’s 25% stake, if RHB ‘decides to let itself be acquired’, the outcome would either determine who would ultimately be the largest Bank in Malaysia or reshuffle the position of local banks’ standings (in terms of total assets). OMG, if that’s not interesting to you, I don’t know what is. Or maybe I’m the weirdo. But hey really, it is super interesting, I get very excited just talking about anything related to it, hence this post!

Oh well, anyway, let’s just see where the market will take us!

*Sings I’m your Dreamgirl…ooohhhh…oooh.oooh.oooh.oooh*