An acquisition deal involves one company purchasing another and taking control of its assets and assuming its liabilities. The acquired company is usually a subsidiary of the acquiring firm. The acquiring firm may purchase the acquired entity outright or take control of it via a share swap (shares in the new, combined entity are issued for those in the acquired entity).
M&A enables organisations to grow more rapidly and achieve key business objectives that would be difficult or impossible to reach through organic growth alone. These include gaining access to global markets, building brand recognition, expanding customer bases, adding product offerings, and acquiring talent, technology, and infrastructure.
Whether you are considering a strategic acquisition or an opportunistic acquisition, the most important thing is to make sure that there is a clear motive and that the consideration paid is fair relative to intrinsic value. It’s critical to get this right, because a failed acquisition can damage a company’s reputation. It can also be a major expense, and it consumes resources that could have been invested in organic growth.
The process of acquiring a company is complex and requires thorough due diligence. There are numerous risks and liabilities that must be considered. To ensure that a deal is in the best interests of your organization, it’s essential to have an expert M&A valuation firm on your side. A good valuation firm will help you identify intangibles and premiums that drive the acquisition price.