If a Merger & Aquisition is being considered at the moment but corporate leadership doesn't know where to begin, the following list will give a solid foundation to begin the journey to a successful investment. Merger and Acquisitions can rapidly change an organizations position by offering program or service expansion, secure barriers that hinder the competitive entry into a market and enhancing your organizations' competitive position, just to name a few. Leaders need to assess their current ability to strive for a merger and acquisition.
Growth: The first step in acquiring a Merger and Aquisition is by assessing growth opportunities in business, markets served or service lines. Leaders need to collect and analyze extensive data including but not limited to
- Client Origin
- Demographics (population, age, employment or unemployment rates, income)
- Other competitors
Identifying Candidates: Leaders need to identify partners that could meet the potential financial growth goal in the identified market or service line that they are trying to target. Questions that should be asked at this stage are
-What are the risks?
- What are the benefits of this acquisition target?
- How does this target compare to other possibilities?
When evaluating the financial and credit potential of both parties volume, revenue, cost and balance sheet considerations should be made.
Go/No Go: This is where corporate leadership needs to take the acquisition in question and look at all of the potential drawbacks and benefits that could come from it and make the decision if the added value of both entities is compelling enough to continue with the acquisition or not.
Value: Evaluating the target value by identifying different ways to build the merger and acquisition transactions and choosing which structure will best help achieve the organizations' objectives. There are 3 main objectives that should be considered when doing the evaluation
- Discounted cash flow analysis
- Comparable transaction analysis
- Comparable publicly traded company analysis
Corporate leadership should at all of these aspects and select which method to identify a realistic appraisal.
When considering a merger and acquisition DRDA, PLLC has the expertise to help the merger and acquisition go as smoothly as possible, through their due diligence and careful analyzing they always find a fair asking price, evaluate financial and cash flow impact and many other key components to make a merger and acquisition come together successfully.