Change the nature of the business or its competitive position.
Brief
Companies choose to pursue a merger or acquisition in order to achieve economies of scale, expand its product/service line and implement new technologies. This means that synergy is often the driving force behind a merger or acquisition. It refers to the potential financial benefit that results from the combination of two business entities. A merger or acquisition is only likely to be worthwhile if the value and projected performance of the joined entities is greater than the sum of its individual parts.
Synergy is an essential criterion for entering into a merger/acquisition agreement. Indeed, the financial benefit resulting from the combination of two business entities must be greater than the sum of the values of each individual party.
The Mergers and Acquisitions (M&A) process involves many steps and can often take from 6 months to several years. An M&A process could be summarized in six essential activities that occur in sequential steps.
“Rather than admitting they’ve done something wrong or that they had a bad strategy, people talk about culture. It is more important to think and plan the integration strategy for the companies, the products, and the people.”
Danny A. Davis
MARKET ANALYSIS
Establish a panoramic view of the target market, and identify the companies that best meet the needs and requirements of our client. Establish an overview of the main players in the field and the market trend.
IDENTIFY CANDIDATES
Proactively identify the universe of potential merger or acquisition candidates that could meet our client’s strategic objectives.
COMPANY EVALUATION
Collection of comprehensive data, such as: The company’s activity sector, its substantial service or product, its position in the market and its notoriety. Implementation of relevant approaches to the valuation of financial securities and intangible assets
SIGNING OF A LETTER OF INTENT
Put forward a letter of intent (defining a legal framework before disclosing sensitive information necessary for conducting audits and negotiating the memorandum of agreement; and ensuring the seriousness of the candidate buyers including their investment capacity, financing …).
DUE DILIGENCE & NEGOTIATION
Upon acceptance of the offer, we examine the financial, legal, and operational situation of the target, while verifying the accuracy of the information and the presentation of all information relevant to the transaction. We immediately start negotiating the final agreements.
IMPLEMENTATION AND FOLLOW-UP
This implies a mechanism to deal with any potential problems in the implementation of the agreement: operational changes; legal and regulatory challenges; and HR implications etc.
