If you’re purchasing a business or even selling your own, there is a lot you need to know and consider when doing so.
MCDA CCG, transaction services provide a unique, seamless follow-through from strategy to execution of your deal. Our consultants tailored approach begins with listening and understanding your transaction needs. Our consultants provide you with the right balance of functional, regional and industry expertise and resources on each of your deals to ensure the quality and scope of deliverables are appropriate for your needs. Our approach to the deal process provides you with the opportunity to have transparency into your deal and ensure you can make profitable strategic informed decisions.
WHY DOES A MERGER AND ACQUISITION HAPPEN?
One reason companies merge or buy each other is the value seen in the other company, and the motivation is to profit from the value. There are countless reasons why two companies may merge or one company may acquire another.
HOW CAN A MERGER AND ACQUISITION AFFECT THE COMPANY AS A WHOLE?
There are a couple things that will affect the company when this happens. One is capital structure and the other is market reaction.
CAPITAL STRUCTURE: the acquiring company or the dominant entity in a merger is more likely to suffer long-term consequences than the firm in an acquisition or the entity in a merger that is subsumed. A transaction like this would offer its shareholders a substantial premium, especially if it was an all-cash transaction. If a company fails in the acquisition of a small firm, its long-term success may not be jeopardized, but if a company fails in the acquisition of a large firm, its future success could be at risk. Depending on how the deal is structured, the acquirer’s capital structure will change after the transaction closes. All-cash deals are likely to drastically diminish an acquirer’s cash reserves.
MARKET REACTION: Depending on what the market thinks of the merits of a transaction, news of a transaction may be regarded as favorable or unfavorable. If the acquirer’s offer represents a significant premium to the target’s previous stock price, the target company’s stock price will rise to a level very close to that of the acquirer’s offer. There is a possibility that the target company may trade below its announced offer price.
WHAT ARE THE BENEFITS OF MERGER AND ACQUISITION?
Economy of scope is a benefit of mergers and acquisitions, meaning one product can be produced for a lower price due to the production of its related product. This results in reduced costs for the overall enterprise (their products).
ARE THERE ANY ISSUES WITH A MERGER AND ACQUISITION?
Organizations face a lack of planning around integration as the biggest challenge in mergers and acquisitions.
Our consultants perform the due diligence based upon our structured approach or under your direction. Our diligence teams provide investment banks, private equity groups, and venture capital firms with the opportunity to maintain lean acquisitions groups and leverage resources as needed. Whether you are an experienced investor or working on your first acquisition, our diligence teams can provide you with the diligence required for your investment decisions. MCDA CCG consultants will approach your acquisition or merger with the single focus of creating shareholder value. This focus requires high quality, rigorous due diligence.
Reach out to us today to inquire about how we can help!