There has been a long history of corporate finance research in the field of acquirers and targets, and our challenge is to apply this rich body of research to the real world. Hedge funds have been applying these research findings as merger arbitrage, and M&A bankers have always had their eyes on scoring and assessing the market on a regular basis (for example, reading the morning news).
In this chapter, we will assume that you are an M&A banker looking for organization opportunities. To optimize our time allocation, we can allocate our time better by focusing on clients that can close the deal. Therefore, we will use a model to predict the probability of us being the acquirers or targets in M&A.
The current new generation of investment bankers should use automated financial modeling tools. Over time, data can be captured, and then prediction capability can be added to assist bankers in financial modeling. The current...