Almost all M&A transactions are motivated by growth. The ultimate objective is to develop the business, whether the stated purpose is to enter a new market, add additional goods or service lines, obtain access to new technologies, or raise market share. Understanding this from the start will help you better understand the M&A process and what makes M&A participants tick. As a result, remember that the goal of every phase of the M&A process, from identifying possibilities to evaluating businesses to negotiating, due diligence, and post-merger integration, is to achieve corporate development.
Mergers and Acquisitions Companies
Mergers and acquisitions (M&A) is a broad phrase that refers to a variety of financial transactions that combine firms or assets, such as mergers, acquisitions, consolidations, tender offers, asset purchases, and management acquisitions. M&A also refers to the departments within financial institutions that deal with such transactions.
Defining Mergers and Acquisition or M&A
A merger is the uniting of two or more enterprises or organizations to form a single entity. The likelihood of each business defaulting on its debt is reduced when two companies unite. The benefits of the merger may enable the new business to become a low-cost manufacturer.
A merger is the uniting of two or more enterprises or organizations to form a single entity. Mergers and Acquisitions are critical to the economy’s smooth operation. They enable businesses to increase efficiency and risk diversification across a variety of operations.
Types of Mergers and Acquisitions
There are various types of mergers and acquisition companies that have different utilities but are confined to only one sort of business. The other types are explained below in a comprehensive manner.
- Mergers – A merger is the voluntary joining of two businesses on roughly equal footing to form a single legal organization. The companies that agree to combine are approximately similar in terms of size, clients, and scope of operations. Following a merger, current owners of both companies are given shares in the new firm. A merger is a strategic process in which two or more corporations join forces to establish a new legal entity. In 2015, for example, ketchup producer H.J. Heinz Co and Kraft Foods Group Inc combined to form Kraft Heinz Company, a significant worldwide food and beverage company.
- Acquisitions – Acquisition occurs when a financially powerful corporation buys out a financially weaker business by purchasing shares worth more than half of the company’s value. Examples of acquisitions include Amazon’s purchase of Whole Foods in 2017 for $ 13.7 billion and Time Warner’s takeover of Time Warner in 2017.
- Consolidations – Consolidation, also known as amalgamation, merges and purchases several smaller businesses into a few bigger ones in the commercial world. Consolidation refers to the grouping of financial statements of a group firm into consolidated financial statements in the context of financial accounting. In technical analysis, consolidation is described as an asset fluctuating between a well-known pattern of trading levels. Consolidation is defined as a period of market indecision that ends when the price of the asset moves above or below the trading pattern. Consolidation is a collection of financial statements that portray (consolidates) a parent and subsidiary firm as a single entity.
- Tender Offers – A tender offer is a public takeover proposal of some sort. A tender offer is a public, open offer or invitation to all investors of a publicly listed firm by a prospective purchaser. A tender offer is a bid to buy some or all of a corporation’s shares from its shareholders. Tender offers are usually made public, and they ask shareholders to sell their shares for a set price and within a set time frame. The price offered is generally higher than the market price, and it is frequently conditional on the sale of a certain number of shares.
- Acquisition of Assets – An asset purchase agreement is a contract between a buyer and a seller that spells out the terms and circumstances of a company’s asset acquisition and selling. It’s vital to understand that the buyer does not have to buy the whole company’s assets in an APA deal. An asset acquisition strategy is a process of purchasing another company’s assets rather than its shares. According to the Internal Revenue Service (IRS), the residual technique should be used to assign the price paid for all of the assets to each individual asset.
- Management Acquisitions – A management acquisition, often called a management-led buyout (MBO), occurs when a business’s leaders buy a majority share in another company and take it private. In order to assist fund a deal, these former executives frequently team up with a financier or former company officers. In most cases, management is finishing paperwork on the back end while workers continue to work throughout the early phases of acquisition. Management will build new procedures, select various time tracking systems for payroll, and make financial decisions during this period.
Structure of M&A transaction
The M&A deal structure is critical because it explains how the transaction will produce value for all parties involved. A thorough M&A deal structure will account for concerns that may arise several years down the road, as well as unanticipated risks that may affect the transaction. Deal structuring is the term for the method through which this occurs. If the deal isn’t structured effectively, all of the time and effort spent on due diligence might be for naught.
A horizontal merger or company consolidation happens when two or more companies in the same industry merge. Because competition is typically stronger among companies operating in the same field, synergies and potential market share gains for merging companies are substantially larger.
Attempts by larger organizations to achieve more effective economies of scale usually result in this sort of merger. A vertical merger, on the other hand, occurs when companies from various segments of the supply chain join forces to make the manufacturing process more efficient or cost-effective.
A vertical merger occurs when two or more firms unite to serve distinct supply chain roles for the same commodity or service. The most common reasons for a merger are to enhance synergies, obtain more control over the supply chain, and ramp up operations. Vertical mergers frequently result in cost savings as well as greater production and efficiency.
The goal of a vertical merger between two organizations is to boost business, increase synergies, and acquire more control over the supply chain process. Because of the possibility of diminished market competition, antitrust breaches are frequently charged when vertical mergers are planned or occur. Vertical mergers may result in decreased costs for the organizations involved, as well as better production and efficiency.
A conglomerate is a business conglomeration that consists of multiple unconnected enterprises. A conglomerate is a firm in which one corporation holds a controlling position in multiple other businesses that operate separately and independently.
Although some conglomerates, such as those in mining, choose to specialize in a single sector industry, conglomerates frequently diversify company risk by operating in a variety of marketplaces. Economists, on the other hand, economists warn that huge and dispersed corporations may become inefficient and expensive to manage, reducing shareholder value.
Benefits of Having a M&A Deal in Companies
Mergers and acquisitions provide economies of scale that organic development may not always provide. Any firm may benefit greatly from an active mergers and acquisitions strategy. There are so many advantages of having mergers and acquisitions deal in companies which are as follows:
Increasing the Worth of Companies
When two firms combine, the new entity earns a bigger market share and gains a competitive advantage. One way for a corporation to gain market share is via innovation. When a company introduces a new technology that its rivals do not yet provide, customers who want to possess it to buy it from that company, even if they previously conducted business with a competitor.
High Growth Ratio
The lower the PEG ratio, the more inexpensive the company is based on future profits estimates. When a company’s predicted growth is factored into the ratio, the outcome is adjusted for firms with a high growth rate and a high P/E ratio. The ‘PEG ratio’ is a valuation statistic that determines the proportional trade-off between a stock’s price, its earnings per share, and its predicted growth.
Strong Market Stability
Financial market stability refers to a state in which market transactions are not disrupted significantly, and financial asset values are not significantly deviated from economic fundamentals, allowing economic actors to raise and manage money with confidence.
Diversification is the act of allocating resources in such a manner that it decreases the risk of being exposed to a single asset or risk. Investing in a number of assets is a typical way to diversify and decrease risk or volatility.
When a target corporation has assets on its books with a tax basis that is less than their market worth, tax benefits might arise in an acquisition. If these assets were held by another firm that might enhance their tax base after the acquisition, they might be more valuable for tax reasons.
Top Companies with M&A deals Ever
Mergers, acquisitions, consolidations, tender offers, asset purchases, and management acquisitions are all examples of financial transactions that may be used to bring firms or assets together. Clients seeking assistance with mergers and acquisitions, as well as debt and equity financing, turn to M&A companies. In essence, the M&A firm serves as a middleman in business sale transactions, acting for either the seller or the buyer. Given below is the table that showcases certain deals:
Transaction/M&A Advisory/Due Diligence
|1||Allen & Company||Banking, Financial Services||1922||US|
|2||Bank of America||Asset Management, Financial Services||1998||US|
|3||Barclays||Banking, Financial Services||1690||UK|
|5||BDO||Accounting, Financial Services||1910||US|
|6||Benchmark International||Financial Services||2006||US|
|7||Canaccord Genuity Group Inc.||Banking, Financial Services||1950||Canada|
|8||Carnegie Investment Bank||Asset Management, Financial Services||1803||Denmark|
|9||CBRE Group||Consulting, Project Management, Real Estate||1906||US|
|10||Cenkos||Banking, Financial Services||2004||UK|
|12||Citi||Banking, Financial Services||1812||US|
|13||CITIC Securities||Banking, Financial Services, Intellectual Property||1995||China|
|14||Clairfield International||Banking, Financial Services||2004||Switzerland|
|15||Credit Suisse||Banking, Financial Services||1856||Switzerland|
|16||DC Advisory||Banking, Financial Services||1995||UK|
|17||Deutsche Bank AG||Financial Services||1972||Germany|
|18||Evercore Partners||Banking, Financial Services, Impact Investing||1995||US|
|19||Global M&A Partners||Advice, Banking, Consulting||1999||Ireland|
|20||Goldman Sachs||Banking, Financial Services, Venture Capital||1869||US|
|21||Greenhill & Co||Financial Services||1996||US|
|22||Guggenheim Partners||Financial Services, Venture Capital||1999||US|
|23||Houlihan Lokey||Banking, Financial Services, Impact Investing||1972||US|
|24||HSBC Bank||Banking, Financial Services||1880||US|
|25||IMAP||Banking, Financial Services||1973||Spain|
|26||Investec||Banking, Financial Services||1974||South Africa|
|27||ISS||Banking, Financial Services||1901||US|
|28||Jefferies||Banking, Financial Services||1961||US|
|29||JP Morgan||Banking, Credit Cards, Financial Services||1871||US|
|30||Lazard||Advice, Asset Management, Banking||1848||US|
|32||Lincoln International||Banking, Financial Services||1996||US|
|33||Livingstone Partners LLC||Angel Investment, Banking||1976||US|
|34||Macquarie Group||Banking, Financial Services||1969||Australia|
|35||Moelis & Company||Banking, Financial Services||2007||US|
|36||Morgan Stanley||Asset Management, Financial Services, Lending||1985||US`|
|37||N+1/ALANTRA||Financial Services, Venture Capital||1985||Spain|
|38||Nomura Group||Asset Management, Finance, Retail||1981||US|
|39||Numis||Banking, Consulting, Financial Services||2000||UK|
|40||Peel Hunt||Banking, Financial Services||1989||US|
|41||Perella Weinberg Partners’ Agility Fund||Financial Services, Venture Capital||2006||US|
|42||Price Waterhouse and Coopers & Lybrand||Accounting, Financial Services||1998||UK|
|43||RBC Capital Markets||Banking, Financial Services||1869||US|
|44||Robey Warshaw LLP||Financial Services||1927||US|
|45||Rothschild||Banking, Financial Services||1970||UK|
|46||Simmons & Company International||Consulting, Energy, Financial Services||1974||US|
|47||Société Générale||Banking, Financial Services, Insurance||1864||France|
|48||Standard Chartered Bank||Banking, Financial Services, Venture Capital||1969||UK|
|49||The Bank of Nova Scotia||Financial Services||1832||Canada|
|50||Tudor, Pickering, Holt & Co. International (Perella Weinberg Partners)||Financial Services, Venture Capital||2006||US|
|51||UBS||Asset Management, Banking||1854||Switzerland|
|52||Wells Fargo & Company||Banking, Financial Services||1852||US|
|53||Zaoui & Co||Advice, Financial Services||2013||UK|
Mergers & Acquisitions consulting firms
|1||Accenture||Construction, Information Technology, Outsourcing||1989||Ireland|
|2||AlixPartners||Business Development, Consulting, Financial Services||1981||US|
|3||Alejandro Cremades||Financial Services||2018||US|
|4||Alvarez & Marsal||Consulting, Professional Services||2013||US|
|5||Analysys Mason||Management Consulting||1985||US|
|6||ATOS Consulting||Management Consulting||1997||Switzerland|
|8||B2E Consulting||Management Consulting||2004||UK|
|9||Bain & Company||Consulting, Information Technology, Internet||1983||US|
|10||Baker Tilly||Accounting, Consulting||1987||UK|
|11||BCG||Consulting, Financial Services, Information Technology||1963||US|
|12||Bearing Point||Advice, Business Development, Consulting||2002||Netherlands|
|13||BJSS||Advice, Consulting, Information Technology||1993||US|
|14||Campbell Tickell||Management Consulting||1998||US|
|15||Capco||Consulting, Financial Services, Insurance||1998||US|
|16||Capgemini Invent||Consulting, Financial Services, Information Technology||1990||Belgium|
|17||Cedar Management Consulting||Consulting||1985||US|
|18||CIL Management Consultants||Analytics, Consulting, Management Consulting||1986||US|
|19||Coeus Consulting||Consulting, Human Resources, IT Management||1970||US|
|21||Convedo||Artificial Intelligence, Consulting||2009||UK|
|22||Cordence Worldwide||Management Consulting||2005||US|
|23||Crowe||Accounting, Advice, Consulting||1942||US|
|24||Curzon Consulting||Consulting, Financial Services ,Health Care||2003||UK|
|25||Deloitte||Accounting, Consulting, Financial Services||1845||UK|
|26||Delta Capital||Consulting, Financial Services, Venture Capital||2014||US|
|27||Dupoint sustainable solutions||Management Consulting, Professional Services, Training||1968||US|
|28||Elixirr||Consulting, Management Consulting||2009||US|
|29||Emerton||Business Development, Business Intelligence||2011||France|
|30||EY||Accounting, Consulting, Financial Services||1989||UK|
|31||Fairgrove Partners||Advice, Management Consulting||2013||UK|
|32||FTI Consulting||Accounting, Consulting, Cyber Security||1982||US|
|35||Grant Thornton||Accounting, Financial Services||1924||US|
|36||Kearney||Collaboration, Consulting, Information Technology||1926||US|
|37||Korn Ferry||Consulting, Human Resources, Recruiting||1969||US|
|38||KPMG||Accounting, Advice, Consulting||1987||Netherlands|
|39||L.E.K Consulting||Advice, Consulting, Finance||1983||UK|
|40||LanciaConsult||Business Development, Business Intelligence, Information Technology||2012||Singapore|
|41||Maine Pointe||Consulting, Information Technology||2004||US|
|42||Marktlink||Consulting, Financial Services, Legal||1996||Netherlands|
|43||Mc.Kinsey & Company||Business Development, Consulting, Management Consulting||1926||US|
|44||Mercer||Banking, Consulting, Financial Services||1975||US|
|47||NMS Consulting||Advice, Consulting, Management Consulting||2018||US|
|48||North Highland Worldwide Consulting||Life Science, Management Consulting||1992||US|
|49||OC&C Strategy Consultants||Advice, Consulting||1987||US|
|50||Oliver Wyman||Consulting, Financial Services, Risk Management||1972||US|
|51||PA Consulting Group||Consulting, Information Technology, Management Consulting||1943||US|
|53||Protiviti||Consulting, Risk Management||2002||US|
|55||Roland Berger||Consulting, Management Consulting, Marketing||1967||Germany|
|56||RSM||Consulting, Financial Services, Insurance||1964||US|
|58||Strategy&||Advertising, Brand Marketing, Business Development||2005||US|
|59||Threetwofour||Consulting, Financial Services||2000||US|
|60||Umlaut||Information Technology, Management Consulting||1996||Germany|
|61||Valcon||Consulting, Financial Services||2002||US|
|62||West Monroe Partners||Business Development, Consulting||2002||US|
|63||YCP Solidance||Advice, Consulting, Financial Service||2011||Singapore|
|64||Zanders||Consulting, Financial Services||1994||US|
M&A Law Firms
|1||Akerman LLP||Professional Services, Legal||1920||US|
|2||Alston & Bird LLP||Professional Services, Legal||1893||US|
|3||Arnold & Porter||Legal||1946||US|
|4||Baker Botts L.L.P||Information Technology, Law Enforcement||1840||US|
|5||Ballard Spahr LLP||Legal||1886||US|
|6||Wendel & Rosen, Black & Dean LLP||Advice, Legal, Real Estate||1909||US|
|7||Bryan Cave Leighton Paisner LLP||Advice, Legal||2018||US|
|8||Cleary Gottlieb Steen & Hamilton LLP||Consulting, Law Enforcement||1946||US|
|9||Pullman & Comley, LLC||Consulting, Legal||1980||US|
|10||Covington & Burling LLP||Advice, Legal||1919||US|
|11||Cravath, Swaine & Moore LLP||Advice, Law Enforcement||1819||US|
|12||Davis Polk & Wardwell LLP||Advice, Consulting, Legal||1849||US|
|13||Debevoise & Plimpton LLP||Advice, Consulting, Legal||1931||US|
|14||Dechert||Advice, Consulting, Legal||1875||US|
|15||Fried, Frank, Harris, Shriver & Jacobson LLP||Advice, Financial Services||1971||US|
|16||Gibson, Dunn & Crutcher LLP||Legal||1890||US|
|17||Goodwin Procter||Intellectual Property, Law Enforcement||1912||US|
|18||Hogan Lovells US LLP||Consulting, Legal||1988||US|
|19||Jones Day||Intellectual Property, Legal||1893||US|
|20||Kirkland & Ellis LLP||Law Enforcement, Legal||1909||US|
|21||Latham & Watkins LLP||Banking, Consulting, Legal||1934||US|
|22||Morrison & Foerster LLP||Advice, Consulting, Legal||1883||US|
|23||Paul, Weiss, Rifkind, Wharton, & Garrison LLP||Legal, Real Estate||1875||US|
|24||Ropes & Gray LLP||Consulting, Law Enforcement||1865||US|
|25||Shearman & Sterling LLP||Advice, Financial Services, Legal||1873||US|
|26||Sidley Austin LLP||Advice, Financial Services, Legal||1866||US|
|27||Simpson, Thatcher & Bartlett LLP||Advice, Legal, Service Industry||1884||US|
|28||Skadden, Arps, Slate, Meagher & Flom LLP||Consulting, Law Enforcement, Legal||1948||US|
|29||Sullivan & Cromwell LLP||Advice, Consulting, Legal||1879||US|
|30||Vinson & Elkins LLP||Advice, Consulting, Legal||1917||US|
|31||Wachtell, Lipton, Rosen & Katz||Advice, Consulting, Legal||1965||US|
|32||Weil, Gotshal & Manges LLP||Consulting, Legal||1931||US|
|33||White & Case LLP||Legal||1901||US|
|34||Willkie Farr & Gallagher LLP||Legal||1888||US|
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