Mergers and Acquisitions (M&A))

Companies must conduct an analysis while contemplating a merger in order to determine if the merger is financially feasible. This involves analyzing the past financials of the target companies and predicting the future performance of the business to assess the viability of the merger. Mergers can drastically alter the financial standing of a company as well as its market position and operational structure. As a result, they could also bring significant risk and also challenge integration, culture alignment, and customer retention.

Operational assessment

Business analysts conduct extensive research and analysis of the operations of a target to provide acquirers with complete details of the company’s strengths and weaknesses as well as opportunities. This helps them identify areas of improvement and suggest strategies to boost productivity and boost efficiency.

Valuation analysis

The most important step in the process of M&A deal is determining the value of the target to the acquirer. This is usually accomplished by comparing and contrasting similar transactions in the market and precedent transactions as well as executing an analysis of the cash flow discount. When conducting M&A analyses it is crucial to use a variety of valuation methods because each has its own distinct perspective.

Analysis of the process of accretion/dilution

A crucial tool for assessing the impact of a M&A deal is an accretion/dilution model, which calculates how the acquisition will impact a buyer’s pro form earnings per share (EPS). A rise in earnings per share (EPS) is regarded as accretive and a decrease dilutive. The accretion/dilution approach is used to ensure the price paid for a goal is reasonable in relation to its intrinsic value.

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