Two heads are better than one, as the saying goes, and that’s often true in M&A transactions. Combining forces can cut costs on duplicate roles licensing, systems, and processes as well as reduce the time-consuming manual tasks that can take away from productive work. Ultimately, it can also aid in increasing revenue and market share.
The M&A process may involve different kinds of transactions. This includes asset sales, equity transactions and mergers. The first step is to assess the goal. This usually involves high-level discussions with the buyer and seller to determine potential synergies and how they might effectively work together.
After the preliminary evaluation is complete and the parties are ready to begin negotiating. This is where the specifics of the deal are determined and analyzed, including determining what assets or liabilities this page are being transferred and under what terms. Negotiations are influenced by a number of aspects, including the manner in which the business is valued, the method used for making a decision on the value of the target business and the form (shares or asset sale) of acquisition.
The reason for the purchase is also important. Based on the motivation, it can impact the price as well as the amount of leverage that is used in the transaction. For example, during a hostile takeover the buyer could attempt to purchase the company without the approval of the company’s board of directors. This is risky and may result in litigation. Therefore it is essential to carefully consider the reasons for the sale.