Two heads are better than one As the saying goes, and that’s often true in M&A transactions. Joining forces can help save money by reducing duplication in roles systems, roles, and licenses. It can also cut down on manual labor that is time-consuming and can hinder productive work. It can also boost revenue and market share.
The M&A process can involve a variety of types of transactions. This includes equity, asset sales transactions and mergers. The first stage is the initial evaluation of the prospective targets. This usually involves high-level discussions between buyers and sellers to determine how they can strategically fit together, and the synergies that could be realized.
Once the preliminary assessment is completed after which the parties can begin negotiating. The parties then discuss the details of the deal, including the type of assets or liabilities to be transferred and on what conditions. Various factors influence the course of negotiations including the precise way in which the business is valued in the process, the method employed to evaluate the target company, and the type of acquisition (share or asset sale).
Another aspect to consider is motivation behind the sale. The reason for selling can have a significant effect on the cost and amount of leverage that is applied to the transaction. In a hostile acquisition, for instance, the buyer may try to purchase the target without board approval. This could be risky and may result in litigation. Therefore it is essential to carefully consider the reasons for the sale.