M&A Transactions – Performing Valuation and Due Diligence

The M&A market is a dynamic one. The structure and motives for deals may change from year to year however one thing is constant completion of the deal takes an enormous amount of work. Conducting due diligence and valuation are two of the most time-consuming aspects of the process.

M&A can make companies more resilient and able to weather tough times. The strength of a company that is combined will be more likely to thrive in a changing world than the weaknesses of a single entity. For example banks are making use of M&A to protect their balance sheets by buying out struggling competitors such as Merrill Lynch.

M&A can also help companies extend their product offerings and to achieve economies of scale. For instance, a tech company may acquire an existing platform provider in order to expand https://www.dataroomspace.info/ the number of products and services it offers its customers. This approach could also lead to more customer satisfaction which could improve the company’s financial performance.

The M&A begins by having a high-level conversation between the buyer and seller to determine if their values are aligned and to examine synergies. The due diligence phase includes operational analyses, financial models, and a cultural fit evaluation. Due diligence is a long process. Therefore, the timeline in the letter of intent (LOI) must be considered when planning the work. One of the most important aspects of due diligence is conducting search, including UCCs, fixture filings, federal/state tax liens, lawsuits, judgment liens, bankruptcy, and intellectual property searches.

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