Managing M&A Transactions

Two heads are better than one As the saying goes and this is often the case in M&A transactions. The joining of forces can help reduce costs by reducing the amount of duplication in roles, systems, and licenses. It can also help reduce time-consuming manual work that can divert attention from more productive work. In the end, it will assist in increasing revenue and market share.

The M&A process may involve different types of transactions. These include asset sales, equity transactions, and mergers. The first step is the initial assessment of the possible targets. This usually involves high-level discussions between the buyers and sellers to determine how they could be strategically connected, and what synergies might be realized.

Once the preliminary evaluation is complete and the parties are ready to begin negotiations. This is where the specifics of the deal are decided in determining which assets or liabilities are to be transferred and at what terms. Negotiations are influenced by a number of variables, including how the business is valued, the method of measuring the value of the target company and the type (shares or asset sale) of acquisition.

The motivation for the purchase is also important. Depending on the motivation it could affect the price and the amount of leverage used in the transaction. In a hostile acquisition, for instance, the buyer may attempt to purchase the target without board approval. This can be risky, and could lead to litigation. Therefore, it is important to take a careful look at the motives for the sale.

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