Mergers and Acquisitions
Buying or selling a business may be an owner’s largest transaction in their lifetime. We apply our experience by planning and working with key stakeholders to execute the purchase or sale of your company.
Providers of debt and capital require professional reports that describe the business, its opportunities, and its value metrics. We understand the banking and investment communities’ criteria for lending and investing. We prepare business valuations, financial projections, business plans, and information memorandums, as appropriate, and manage the process and negotiations to attract capital to a company.
Over the last few years, M&A activity in this space has not only picked up, but the size of deals is also increasing. For firms looking to either buy or sell, understanding the M&A market ‒ and what each side needs out of a deal ‒ is a must. For sellers, that may mean maximizing your company’s value and identifying potential suitors. For buyers, that may involve doing thorough due diligence and ensuring your company and your target’s business undergo a smooth integration.
Transaction Services for Mergers and Acquisitions
We use our experience and training to provide a number of services related to a transaction including:
Financial projections - We compile financial projections in accordance with professional standards that can include detailed multi-period balance sheets, income statements, statements of cash flow, and dynamic user-defined assumptions that are clearly described and easily varied for purposes of sensitivity analysis.
Business plans - We prepare comprehensive business plans for purposes of business acquisition and financing that include an industry overview and analysis of opportunities and threats, a company overview and analysis of strengths and weaknesses, sales and marketing plans, and historical and projected financial analyses.
Due diligence procedures - We work with the client to develop and execute due diligence procedures that focus on the most relevant risks and informational needs.
Tax planning - We have internal accountants and tax advisors that coordinate the professional services required to progress a transaction.
Estimating proceeds under various scenarios - We often review various purchase and sale scenarios to estimate net proceeds to shareholders for purposes of informed decision making.
Steps in the Selling Process Include
Pricing Analysis: We are experts in business valuation. A pricing analysis can be basic calculations to get a preliminary indication of value, or detailed analyses that isolate and separately consider the value of identifiable intangible assets and/or estimate accretive value to a strategic purchaser.
Planning: We provide advice to executive management, in consultation with other professional advisors as required, regarding such things as the company’s preparedness for a sale, alternative structures for selling the business assets or shares, estimating net after tax proceeds from a sale, and assessing the purchaser universe for the business.
Marketing Materials: We work with the company’s finance and executive team to prepare a confidential information memorandum in sufficient detail to provide prospective purchasers with a full appreciation of the strengths, opportunities, and risks of the business, so they may prepare a letter of intent to purchase the business.
Purchaser Search: We work with executive management to identify prospective purchasers and lead contact with those prospective purchasers to determine their level of interest.
Negotiations: We lead discussions with qualified prospective purchasers, including coordinating management calls, responding to information requests, reviewing the financial terms of indications of interest compared to valuation expectations, and working with executive management to negotiate an acceptable letter of intent.
Due Diligence: We work with the company’s staff, accountants, and legal counsel to electronically assemble (and help prepare as required) information to respond to due diligence requests. We provide online resources to facilitate electronic access to due diligence materials by interested parties and examine information.
Types of Mergers and Acquisitions
Horizontal M&A - Bring together similar products and reduce competition in an industry. An example of a horizontal M&A would be the integration of Facebook and Instagram. The social media platforms are not exactly the same, but merging ensures that they will not develop into direct competitors.
Vertical M&A - Are intended to increase efficiency, profits, and product offerings. They occur when two separate companies with different services or products share the same supply chain and extend their business capabilities. Vertical M&As do not require a company to acquire its competition.
Market Extension - Is when two businesses that produce the same products in different markets join together. This type of M&A is to ensure that both companies have access to a larger customer base for their services.
Product Extension - Is when two businesses that create related products in the same industry merge to sell their products together and gain access to more customers, ultimately increasing profits. As a result, the alliance brought together two products that support each other.
Conglomerate M&A - Is when two businesses that are in totally unrelated markets join together. This type of M&A creates a possibility to decrease cost while increasing efficiency. There is no effect on competition since the two merging businesses are in different industries, but it reduces the chance of more competition in the future.
Concentric M&A - Also known as a congeneric merger, is when two companies in the same industry combine to offer a more extensive range of services and products. These organizations commonly share similar distribution, technology, and marketing channels. An example of this type of M&A is when Kraft, a producer of condiments and lunch meats, and Heinz, a producer of sauces and frozen foods, combined to sell their products together rather than competing.