Mergers and acquisitions are often transactions that are complex and large in value. These transactions often require large teams to work together to work through the transaction and reach an amicable solution acceptable to both parties. Amidst the global race for merger and acquisition transactions worldwide and the need to keep such transactions secret, transaction advisory services can assist the organization’s management and ensure that such transactions are concluded at the earliest. In 2019 alone, a total of around 49,849 M&A transactions occurred with a net value of approximately 2.8 trillion USD.
How can transaction advisory services help, and why they are needed?
Transaction Advisory services often include a team of experts that are experts in the various subject matters involved in a merger and acquisition deal. An M&A transaction has multiple tranches, and all such tranches have to be moved separately and yet in a coordinated manner. Transaction advisory services are needed to ensure that such transactions are completed in a timely and effective manner. Apart from the complex nature, transaction advisory service providers are required for:
Appropriate Valuation Metric
One of the most controversial and debated topics regarding any mergers and acquisitions deal is the valuation metric at which such a deal should be concluded. The buyer and the seller are often at loggerheads regarding the amount payable and mode of payment. In the case of a company, both parties need to justify the amount to their shareholders. In such a scenario, a transaction advisory service can serve as a valuable sounding board and allow the parties in question to negotiate. Such service providers can even prepare a valuation for the deal which is agreeable to both the parties and help complete the deal.
A mergers and acquisitions deal would require in-depth and detailed due diligence of both the companies involved in such a deal. Such due diligence is critical from a financial perspective and other perspectives such as Human Resource, Legal, Operations, and taxation point of view. Such a broad scope of due diligence requires and calls for a team of experts. Transaction Advisory service providers such as Dewan P.N. Chopra & Co., E&Y, Deloitte, etc., have a team capable of providing such multi-faceted services and ensure that such teams are a one-stop solution for the companies involved in the transactions.
Preparation of Business Plans
Mergers and Acquisition transactions often require a proper business plan to be developed to integrate both the business. A transaction advisory service provider can formulate and integrate business plans to complete the merger deal between both parties. Such a business plan would include the transfer of assets, payment terms, and other terms and conditions that are key to such transactions. The business plan would also include the structuring of the deal and the new company, besides presenting such plans to investors.
One of the essential aspects when it comes to an M&A transaction is the successful integration of the firms and post-acquisition synergies. Many companies often struggle with such aspects due to the difference in the firms’ top management opinion and reluctance to change. A transaction advisory service provider assists the companies and the management of such companies in the realization of synergies and assists in the removal of any obstacles that the companies may face in integration.
Mergers and Acquisitions are complex deals that are worth often millions or billions of dollars. Due to the transaction’s complexity and several other factors, a transaction advisory service provider can ensure that the transactions are not held up or do not face any legal trouble or other problems. Such professionals can provide their expertise in various fields to negotiate and conclude a deal that is beneficial to both parties.