Across the M&A life-cycle, post-merger integration is one of the most critical processes to ensuring a successful acquisition. While taking a prudent approach to valuation and not overpaying for revenue synergies can go some way to preventing a failed integration, there are other key factors which, if approached correctly, can significantly increase the chance of integration success (or … Read more
An M&A strategy might make perfect sense on paper, but the core driver – people – can easily be ignored. While for many organizations hard facts relating to revenue and costs lie at the heart of the deal rationale, the less tangible, human side of M&A can be equally important. Indeed, in today’s era of … Read more
Many acquisitions are justified on the basis that they will create synergies – being when the combined post-merger integration value of two companies working as one is greater than the aggregated pre-merger value of both companies working independently (the concept of 1 + 1 = 3). Carefully managed, synergies can contribute to value beyond the sum of … Read more
Post-merger integration (PMI) is a fundamental stage to realizing the value of an M&A deal. It is a complex process, usually occurring under extreme time pressure while maintaining business continuity. There is no one-size fits all approach to successful post-merger integration. However, careful planning, focusing on the strategic objectives of the deal and the identification and … Read more
Environmental concerns are becoming an increasingly important part of M&A due diligence, yet they are still often overlooked. The key objective of environmental due diligence is the identification of all material environmental risks that may affect a transaction, either pre- or post-closing. Environmental issues can significantly impact the valuation of a transaction from the Acquirer’s perspective … Read more
IT due diligence should paint a clear picture of how technology helps the Target run its operations and whether there are any “deal breakers” that would cause the Acquirer to abort the transaction or to seek a price reduction (for instance, due to significant capital expenditure being required to upgrade IT systems). IT M&A due diligence is becoming increasingly … Read more
1. Tax Compliance The starting point of an M&A due diligence tax exercise should include a detailed assessment in order to determine whether the Target presents any compliance risks – this may include a review of all relevant tax filings and details of any open/closed tax inquiries with the relevant authorities. Taxes that fall under such an … Read more
People usually love the idea of standardizing their M&A playbook and building an “M&A machine” or an “acquisition factory.” However, the immediate follow-up questions are: How much you can really standardize the M&A process? Does it depend on whether I do many smaller deals or a large mega deal? Smaller deals typically follow a more standard … Read more
1. Accounting Standards During the M&A due diligence process, it often becomes apparent that the Target has failed to comply with at least some accounting standards (for various reasons). Typical examples include the Target recognizing income on a cash basis (rather than an accruals basis) or recognizing revenue incorrectly (this is more likely if the Target has … Read more
As our article Enterprise Value Versus Equity Value – Determining The Final Value In Transactions outlines, the final price paid for the “Equity Value” of a company is often substantially different from the headline price or “Enterprise Value” initially agreed between the parties of a deal at the point the LOI is signed. The fundamentals behind Equity … Read more