Any buyer in the M&A company that fails to fulfill this responsibility is likely to inadequately understand the target company, opening the possibility of participating in a deal that destroys value.
And, given the ability for the right brand choices to drive preference and earn a price premium, the future success of a merger or acquisition depends on making wise brand choices. Brand decision-makers essentially can choose from four different approaches to dealing with naming issues, each with specific pros and cons:[32]
With the mandate and objective of increasing the value of the company, management—often with the aid of investment banks—will attempt to find external organizations with operations, product lines, and service offerings, and geographical footprints to complement their own existing operation.
An M&A deal is a general term used to describe a transaction through which two or more companies consolidate.
"Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger and/or longer-established company and retain the name of the latter for the post-acquisition combined entity. This is known as a reverse takeover.
It is not uncommon in private company and acquisition valuations to see large premiums attached to estimated value to reflect the 'value of control'. But what, if any, is the value of control in a firm, and if it exists, how do we go about estimating it? In this paper, we examine the ingredients of the control premium. In particular, we argue that the value of controlling a firm has to lie in being able to run it differently (and better). Consequently, the value of control will be greater for poorly managed firms than well run ones.
relative valuation: the price paid per dollar of earnings or revenue is based on the same multiple for comparable companies and / or recent comparable transactions
Conseguindo formar uma nova maioria pelo conselho, a postura da companhia pode mudar do tratado utilizando os novos acionistas controladores.
One of the major short run factors that sparked the Great Merger Movement was the desire to keep prices high. However, high prices attracted the entry of new firms into the industry.
This abundance of capital is likely to aquisições shape the M&A landscape well into 2022—and may put corporate, PE and SPAC buyers on a collision course as they compete to acquire technology, capabilities, and other sources of advantage. The competitiveness of the market reflects a growing understanding among business leaders that creating value requires more than cost-cutting—and they are willing to pay more for revenue synergies that fuel long-term growth.
Mid- and senior-level analysis is done both by internal personnel and external consultants to study the marketplace. This analysis assesses the direction of the industry and the strengths and weaknesses of current competitors.
Resource transfer: resources are unevenly distributed across firms (Barney, 1991) and the interaction of target and acquiring firm resources can create value through either overcoming information asymmetry or by combining scarce resources.[14]
Consultants should also inspect facilities and capital equipment to ensure the buyer will not have to pay for unreasonable capital expenditures in the first few months or years after the acquisition.
This paper focuses on equity valuation using multiples. Our basic conclusion is that multiples nearly always have broad dispersion, which is why valuations performed using multiples may be highly debatable. We review the 14 most popular multiples and deal with the problem of using multiples for valuation: their dispersion. 1,200 multiples from 175 companies illustrate the dispersion of multiples of European utilities, English utilities, European construction companies, hotel companies, telecommunications companies, banks and Internet companies.