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When a business organization is in financial troubles and finds it almost impossible to avoid the disaster even with the help of loans, mergers and acquisitions can help it out of the dreadful circumstances. It does not require to mention or explain how the organization as well as its employees suffer if it comes to a deadlock. Mergers and acquisitions save the employees of the organization that’s running in loss. In addition, it also carries with it the prospect of capital raising that is going to help the organization in multiples ways.
There are two parties concerned in mergers and acquisitions. Both the parties enjoy benefits, considering their own financial aims and planning. The acquired organization is saved from ceasing to exist while the acquirer enjoys the benefits same as those of having a new branch for the least expenditure. However, before going into deal of mergers and acquisitions, both the parties should verify certain aspects.
The Fundamental of Merger and Acquisition
The fundamentals of mergers and acquisitions are based on analytics. It is very necessary for the would-be acquired organization to understand its current potential and target acquirer. The organization should also consider how compatible a relation it will be able to keep with the acquirer. Just like medicines are prescribed only after diagnosis through tests have been done, the merger and acquisition deal should be fixed based on the strategic analysis of the circumstances; and it is necessary for both the parties the buying as well as the selling company since the goal for both the parties is to maximize the shareholder value.
Professional Help for Mergers and Acquisitions
Whether your organization is the acquirer or the acquired, the best option for you is to get services from mergers and acquisitions experts. You might wonder if it is really necessary to hire a service provider to ease the process. The fact remains that if you hire expert professional service, there are multidimensional benefits restored for you in future. Let us see how professional services in the niche of mergers and acquisitions help the acquired as well as the acquirer.
Services for the Acquired Organization
When the service providers assist the smaller organization that is going to be acquired, their services concern capital raising by monetizing their company, divisions and assets. They also plan an exit after a certain period and create the exit strategy that defines the necessary steps to be taken and activities to be conducted. Thus they ensure maximized cash flow.
Services for the Acquiring Organization
When the service providers serve the larger company or the acquirer, they help in identifying the most compatible organization that should be acquired. It identifies various opportunities for improving margin and ensures growth. The service providers also make an assessment of the optimum leverage and determine the necessary liquidity reserves. In addition, they also determine the negotiation terms that take into account the post-closing items. Below are some other aspects in which the concerned service providers prove to be of great help.
- Strategies to maximize shareholder value.
- Conducting an SWOT (strengths, weaknesses, opportunities and threats) analysis.
- Creating and reviewing strategic market plans.
- Identifying monetization alternatives.
- Analyzing profitability by product, customer and distribution channel.
- Competitor analysis.
- Industry analysis.
- Monetizing assets including tangible, intangible and intellectual property.
Jacob Willis is a finance advisor who discusses the two different ways the service providers work when they serve the to-be-acquired organization and the acquirer. He also finds how their mergers and acquisitions related services include capital raising as well.
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