What Do Mergers and Acquisitions (M&A) Consultants Do?
Mergers and acquisitions consultants work with businesses to manage strategic or financial acquisitions by providing guidance through time-tested methodology, transaction execution and industry contacts.
M&A advisors help their clients identify targets that provide opportunities such as technological competitive advantage, market expansion into new regions and people skills with specific industry knowledge. In addition, they help the acquirer realise new developing markets and the value they stand to gain from those ventures. M&A consulting provides roadmaps on how to seamlessly integrate these businesses.
Most In-Demand Services of Mergers and Acquisitions (M&A) Consultants
Why Hire Mergers and Acquisitions (M&A) Consultants?
Mergers and Acquisition advisors conduct business modelling, deal structuring and price guidance in order to identify the strategic benefits regarding the target company. The deals require an accomplished consultant to search for potential buyers, perform extensive financial analysis, due diligence, negotiations, valuations, and risk assessment.
M&A consultants provide expertise throughout the process of the business merger or buyout by providing the below support systems.
Perform business valuation
M&A consultants are brought in right from the beginning of the acquisition process. They assess the acquiring business and make sure that the books are in order. They also ensure relevant documents are available. These may include incorporation certificates, tax filings, lease and loan agreements, easing the acquisition process.
Develop an acquisition strategy
Once the reason for an acquisition or merger has been identified, the consultant will develop a strategy to acquire a target company that is in line with the vision of the acquiring company. The consultant will steer conversations towards the identified criteria such as location, operational capabilities and technological innovations. For example, If one of the key criteria was geographical location then the target company has to be in a specific area.
In this stage, the M&A advisor begins to reach out to potential targets that meet the proposed criteria and provide the best strategic benefit to the acquiring company. Offers will then be made and the M&A consultant will use their expertise to help your business determine which target companies are tractable. A business valuation is made on the best offers and then pricing negotiations begin. This process can be intense especially with multiple offers and requires scrutiny, which is why the aid of an experienced M&A advisor will be a valuable addition to the task. Documents are examined in detail to verify terms and conditions a requisite for successful deal making as inadequate validation can cause a deal to fall through.
The next step after the letter of intent is submitted, is the due diligence process. In this stage, a detailed analysis is performed on the target company’s assets and operations. This process reveals any weaknesses the company may have and provides an overview of the true financial status. If all is in order, the buyer and seller enter into a legally binding sale contract.
Closing the deal and integration
The buyer meets the sale agreement conditions and legally takes over the target company. The M&A consultant at this point provides help to the acquiring company on successfully closing the deal and the two companies can begin to work together to integrate.
Mergers and Acquisitions consultants help sail the ship home by providing the right navigation tools in business partnerships and alliances during the sale or acquisition of a business.
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Tips on How to Hire Mergers and Acquisitions (M&A) Consultants
It is commonly believed that the decision to sell or acquire a company should be guided by an accountant or lawyer. An accountant will provide information on the financial status of a company while a lawyer on the other hand provides legal guidance. This is where the expertise of M&A advisors comes in to bridge the gap and to provide guidance from both a legal and financial perspective.
It is crucial to enlist the services of an M&A advisor so as to maximize value in the sale or acquisition of a business. Successful deal closings are piloted by consultants who work in your best interests. Here are some tips to help you find the right M&A consultant:
- Ensure that the consultant has the financial expertise when it comes to business analysis and valuation. Financial modeling is a technical skill required to show the performance portfolio of a business. The M&A advisor needs to build models for both the acquiring and target company to provide current financial status. The models provide guidance on decision making as to how a merger or acquisition will impact the future. Competent M&A consultants have the knowledge to build and analyze financial models.
- The need to increase value is at the heart of every merger and acquisition. The ideal M&A advisor should be one that can research and have global market understanding. This gives them more insights when it comes to comparing offers from multiple target companies as they have a deeper understanding of industry behavior. The M&A consultant who has a global perspective looks at all options and how that will affect future growth. This is an added benefit to the acquirer as it lets you know that their advice is based on long term and not short term perspective.
- The ideal consultant has knowledge of corporate law and mergers. There are various legally binding documents such as letter of intent and sale contract that are required. It is the duty of the advisor to ensure that all lawful documents have acceptable terms for both the acquirer and target companies. Failure to do so may cause a deal to fall through, making it a very critical skill.
- Negotiation skills are essential to adeptly handle multiple offers and bidding wars. When target companies are identified, an advisor has to consider offers on the table and any concessions that both parties need to make. The ideal consultant is able to bargain until both sides reach satisfactory terms.
- Deal-making is a very involved process. There are confidentiality agreements, letter of intent and the final sale and purchase to be signed. An experienced consultant will verify that each of these documents are written in the best interest of their client.
- M&A transactions are bound to encounter difficulties. Problem-solving skills are needed to overcome barriers such as misrepresentation of facts during due diligence and bureaucracy when there is a hostile takeover. The advisor must have the ability to anticipate potential obstacles and prepare solutions for them.
- Analytical skills are especially needed when a smaller company like a startup is acquired by a larger more established company. The advisor has to perform a detailed analysis so they can better advise the acquirer of the synergies that they stand to gain from the acquisition.
Every business will eventually reach maturity and need an exit or renewal. The process requires the seasoned expertise of an M&A consultant that is committed to meeting your long term objectives. Choosing a mergers and acquisitions advisor is key to making a successful deal when it comes to the sale or acquisition of a business. Trust us to deliver a handpicked consultant for you and your unique project needs.