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CS Professional MERGER AND ACQUISITION TRANSACTION

CS Professional MERGER AND ACQUISITION TRANSACTION

CS Professional MERGER AND ACQUISITION TRANSACTION

  1. DEVELOP AN ACQUISITION STRATEGY: – acquisition strategy is very much important before going for an acquisition or merger. The company should know what’s their need behind the merger and an acquisition? A company should know what they want to gain from the deal and their objective behind it and objectives can be of the following type:-
  • Financial
  • Technological
  • Market growth
  • Manpower
  • Product growth
  • Economies of scale
  1. SEARCHING POTENTIAL AND STRATEGIC PARTNER: – after the planning stage and deciding what will be the organization objective regarding merger and acquisition, it is the time to find a potential partner for merger and acquisition by methodically and by the group of expert people who will scope all the potential companies that will suit firm agenda. Search should be diversified so that all aspects will be covered.
  2. PLANNING AN ACQUISITION: – Target Company which will be selected in the searching process should be analyzed from head to toe. Company’s financial and credit position should be thoroughly analyzed. What will be the potential drawbacks for acquiring target Company?

Why we are choosing the target company over others? After analyzing the benefit and drawback of the process, the company will make a yes/no decision.

  1. VALUATION PROCESS: – after reaching a decision, the valuation process will begin. The expert valuer will decide what will be the best alternative to go with merger or acquisition. There are many methods to evaluate company according to company status whether it’s listed or companies with special status. Following are the method for valuation
  • Asset-based method
  • Market value method
  • Profit based methods

 

  1. NEGOTIATION: – as Valuer will thoroughly examine company business and its assets and liability status. It can help acquirer to quote the desired price and also to negotiate on it.
  2. DUE DILIGENCE: – Once the offer is accepted, then begins the exhaustive process of complete due diligence to ensure the risk and opportunity comes with the target company. DUE DILIGENCE will tell the detailed review of organization financial, legal and operational position and also the accuracy of previous information. It works as a last cautionary work before sealing a deal.
  3. ARRANGING FINANCE: – If there will be no significant problem in the due diligence process, we can move toward next step which will be sale and purchase and for that company will need finance which it will arrange from various sources like:-
  • Payment of cash or by the issue of securities
  • A financial package of loans etc involving financial institutions and banks
  • Rehabilitation finance
  • Leveraged buy-outs

 

  1. MONITORING POST MERGER SITUATION: – after the merger or acquisition company have to organize each and every aspect of the company’s functional areas to achieve desired objectives and result.

Management will work on every aspect and with coordination to maximize the strategic value of the company. What will the regulatory changes be done by the acquirer company to bring Target Company on track?

Following are the field should be taken into consideration:-

  • Operating economies
  • Financial economies
  • Growth and diversification
  • Managerial effectiveness
  • Human and cultural aspects

 

For more such notes click here and for free video lectures of CS course, click here. Insert link to the youtube channel.

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November 1, 2018

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