The M&A market is a dynamic one. The motivations and structures of deals may change from year to Check Out year but one thing remains constant the amount of effort needed to close a deal. Valuation and due diligence are two of the most time-consuming elements of the process.
M&A can make companies more resilient and able to endure difficult times. A combined company is likely to weather global market shifts better than a single entity. For example banks are utilizing M&A to safeguard their balance sheets by buying out struggling competitors, such as Merrill Lynch.
M&A can also help companies increase their product offerings and gain economies of scale. For instance, a technology company could acquire an online platform provider to expand the number of services and products it can offer its customers. This strategy could also improve customer satisfaction, which may help improve the financial performance of the firm.
The M&A begins with a high-level meeting between the seller and buyer, to determine how their values match and to examine synergies. The due diligence phase includes financial models, operational analyses, and a cultural fit assessment. Due diligence can be an extensive process, and the timeframe in the letter of intent (LOI) must be considered when planning for this work. One of the most important aspects of due diligence is conducting searches, such as UCCs and fixture filings. federal and state tax liens, lawsuits, judgment liens, bankruptcy, and intellectual property searches.
