What should I consider in an M&A deal?

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I am wondering to know what to be inclusive in an M&A deal. Can anyone help me with it?

Alicewi willson Answered question February 21, 2023
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First and foremost, an M&A deal refers to the consolidation of two business entities. The reason may be expansion, growth, recovering from losses, entering another domain, etc. This can never happen unless you interact with technicalities and various challenges beforehand. These are mainly concerned with bankers, chartered accountants, legal matter experts. So, it’s always a plus point to hire an expert. You may track his/her success records and then, decide.

However, there are certain expert areas where your focus is a must-have. These are related to the following:

Business valuation, which is all about discovering the financial status, like cash, shares, and liabilities, of the target company. It covers the valuation of historical earnings, assets, future maintainable earnings, relative, discounted cash flow (DCF) models, etc.

Accounting implication is the second thing that you need to consider. It requires you to follow five main principles, covering the accrual principle, the matching principle, the historic cost principle, the conservatism principle, and the principle of substance over form. An efficient M&A deal can be possible if you consider this aspect.

Tax treatment is the third thing that is indeed important, which includes the understanding of claimed Federal Income Tax.   Besides, you need to attend some other aspects like synergies, strategies rationale, and intangible barriers.

Alicewi willson Answered question February 21, 2023