Two heads are better than one, as the saying goes, and that’s often true in M&A transactions. Joining forces can cut costs on duplication of roles licensing, systems, and processes and also cut down on time-consuming manual tasks that can hinder productive work. It can also boost the amount of revenue and market share.
The M&A process can comprise a variety of kinds of transactions. This includes asset sales, equity transactions and mergers. The first step is to evaluate the goals. This usually involves discussions at a high level between sellers and buyers to determine how they may strategically fit together, and the synergies that could be realized.
Once the preliminary assessment is complete after which the parties may begin negotiating. The parties will then negotiate the specifics of the deal, including what assets or liabilities will be transferred and on what terms. Many factors affect the course of negotiations, including how precisely this hyperlink the business is being valued, the method used to assess the value of the target company, and the type of acquisition (share or asset sale).
The reason for the purchase is also important. The motive behind the sale can have a significant effect on the amount and price of leverage that will be applied to the transaction. In a hostile takeover, for example, the buyer could attempt to buy the target without the board’s approval. This can be risky and cause litigation, so taking care to consider the motives for selling is essential.