Mergers and Acquisitions (M&A))

Companies must conduct an analysis when contemplating a merger in order to determine if the proposed deal is financially feasible. This includes analyzing the historical financial records of the companies in the proposed merger and forecasting future performance to assess the viability of the merger. Mergers can dramatically alter a company’s financial status as well as its market position and operational structure. In turn, they can also introduce significant risk and pose a challenge to integration, cultural alignment, and retention of customers.

Operational assessment

Business analysts conduct extensive research and evaluation of conducting vdr analysis for a potential merger the operation of a target in order to give buyers a full picture of the strengths as well as weaknesses and opportunities. This allows them to identify areas to improve and suggest ways to increase efficiency and productivity.

Valuation analysis

The most important step in a M&A transaction is establishing what the target is worth to the company that is buying it. This is typically done by comparing trading comparables, previous transactions and the discounted-cash flow analysis. It is important to use various valuation methods when conducting M&A analysis, as each has its own perspective on the value.

Analysis of Accretion/Dilution

A key tool for evaluating the impact of a M&A deal is an accretion/dilution model which is a calculation of how the acquisition will affect a buyer’s pro form earnings per share (EPS). A rise in earnings per share (EPS) is considered to be accretive and a decrease dilutive. The accretion/dilution technique is employed to ensure that the price paid for a goal is appropriate in relation to its intrinsic value.

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