M&A Transactions – Performing Valuation and Due Diligence

The M&A space is a constantly changing one. The structure and motives for deals may change from year to an year however one thing is constant in that closing the deal requires massive amounts of work. The process of valuing and due diligence are two of the most time-consuming aspects of the process.

M&A can aid in making companies more robust and able to withstand tough times. A company that is combined is more likely to survive changes in the global market better than a single company. Banks, for example make use of M&A to safeguard the balance sheets of their firms by purchasing struggling competitors such as Merrill Lynch.

In addition, M&A enables companies to gain economies of scale by expanding their product portfolio. For instance, a technology company could acquire a platform company to increase the number of services and products it provides customers. This approach could also bring more satisfaction to customers dataroomspace.info/ which, in turn, could increase the company’s financial performance.

The M&A process starts with a high-level discussion between the prospective buyer and seller to assess the way in which their values are aligned and to determine the potential for synergies. The next step is due diligence that involves the creation of financial models operational analysis, as well as evaluation of cultural fit. Due diligence is a long process. Therefore, the timeframe in the letter-of-intent (LOI) must be taken into account when planning this process. One of the most important aspects of due diligence is conducting searches, including UCCs, fixture filings, federal/state tax lien, litigation, judgment liens, bankruptcy, and intellectual property searches.