Mergers and acquisitions are some of the most common corporate actions. There have been about 1,000 merger and acquisition deals in the United States in April and June 2021. Nevertheless, mergers and acquisitions can be very confusing if you’re dealing with them for the first time. If you’re anticipating a merger or an acquisition deal and are looking for a certified broker dealer, the following is what you need to know about mergers and acquisitions.
1. Mergers and Acquisitions are not Interchangeable Actions
Although many people often assume that mergers and acquisitions are synonymous, interchangeable actions, they are not. A merger is a corporate action in which two companies come together to form a new company. On the other hand, an acquisition involves one company taking over another company by buying it — don’t use them interchangeably.
2. Mergers and Acquisitions Take Long
Another thing you need to know about mergers and acquisitions is processes can take a long time to materialize. The period is often four to six months. Additionally, the time is dependent on the buyer’s urgency to conduct due diligence and complete the process. It is also dependent on the seller’s ability to conduct a competitive marketing campaign to attract multiple buyers. Fortunately, you can hasten the process if you hire a certified broker dealer to help you with the process.
3. A Valuation Analysis is Essential
You’ll need a comprehensive valuation analysis to continue with either a merger or acquisition process. If you’re buying a company, the company owner must provide a valuation of their company. You should do the same if you’re the one selling your company. In an acquisition, a valuation analysis ensures the seller gets the right compensation for their company. At the same time, the buyer receives reassurance that the business they’re buying has all resources and assets mentioned in the deal. In mergers, valuation analysis promotes credibility between the two companies.
4. Mergers and Acquisitions Are Negotiable
Mergers and acquisitions are negotiable like other business dealings. Knowing the value of the company you’re buying or selling will give you negotiating power. Additional information that you can use to negotiate includes the availability of multiple bidders, current trends in the market, and the history of the company’s financial activity.
Having information about the essential things you need to know about mergers and acquisitions will help you navigate the processes with much ease. Contact a certified broker dealer if you need help or have any questions about mergers and acquisitions.