Mergers and Acquisitions (M&A))

If considering a merger businesses must conduct analysis to determine whether the deal makes financial sense. To determine whether the deal is viable in evaluating the feasibility of a merger, businesses must look at previous financial data and then predict the future performance of the targeted companies. Mergers can significantly alter the organizational structure of a company, its financial standing, and position in the market. As a result, they could also bring significant risk and challenge integration, cultural alignment and retention of customers.

Operational Assessment

Business analysts conduct thorough analyses and studies of a target company’s operations to give buyers an in-depth picture of its strengths, weaknesses and potential. They can identify areas of improvement and suggest ways to increase efficiency and productivity.

Valuation analysis

The most important aspect of a M&A deal is determining the value of the target to the company that is buying it. This is typically done through comparing trading similars, precedent transactions and performing the discounted-cash flow analysis. When conducting M&A analyses it is important to use different valuation techniques since each provides a an individual perspective.

Accretion/dilution analysis

A crucial tool for assessing the impact of an M&A deal is an accretion/dilution model which calculates how the acquisition will impact the pro nominal earnings per share (EPS). A rise in EPS is viewed as positive, whereas the decrease in EPS is viewed as dilutive. The accretion/dilution model is used to ensure why not try these out that the price paid for the target is a fair price in relation to its intrinsic value.