Many corporate finance professionals face the challenge of finding the best way to grow a business. The question is often whether it’s better to invest in projects within the company as it is or to grow by acquiring other firms.
Mergers and acquisitions are part of the process of inorganic growth, which is often the path a company may choose. In a recent survey, more than 90% of U.S. executives in both private equity firms and corporations reported that they expected mergers and acquisitions to remain stable or increase in the next 12 months.
Mergers and acquisition deals often become complicated, and having the knowledge and experience to avoid potential risks and complications is critical. A consulting firm can help you avoid the pitfalls of mergers and acquisition deals and help you grow your business with minimal risk.
Understanding Mergers and Acquisitions
Mergers and acquisitions–or M&A–are the processes of fusing corporations or their assets. While some use these terms interchangeably, mergers and acquisitions are actually separate processes.
When two companies merge, they agree to form a new entity. For example, if Company A and Company B decide to consolidate, they would create a new entity: Company C.
A well-known example occurred in 1999 when Exxon Corporation and the Mobil Corporation merged to form Exxon Mobil Corporation.
An acquisition occurs when one company assumes ownership of another company or asset by purchasing the entity. For example, if Company A buys Company B, these two entities may continue functioning as Company A.
One recent example of an acquisition deal is when Amazon acquired Whole Foods, meaning it now owns the high-end grocery chain and its assets.
Mergers and acquisitions can help corporations grow and extend their reach–but securing a good deal can be challenging.
Common Risks of Mergers and Acquisitions
The benefits of mergers and acquisitions can be immense–but they can be complex and prone to setbacks. Here are some of the most common issues that arise within M&A deals.
Insufficient due diligence
Purchasing pre-existing assets can benefit your company, but you must avoid taking on legal problems, tax issues, and other complications. Failing to do your research before finalizing an M&A deal can lead to significant problems down the road.
With the pressure that can build during an M&A transaction, some companies are pushed to overpay just to get the deal in place.
Problems with integration
Mergers aren’t just about money and assets–they also involve melding cultures and processes. Without a thorough plan in place, companies can experience tumultuous times as employees, ideas, and values clash.
Working with mergers and acquisitions consulting specialists can help you avoid the setbacks and issues that can stall your progress.
Mergers and Acquisition Consulting
Intuitive Edge offers a different approach to mergers and acquisition consulting. In our current highly regulatory and litigious environment, successful mergers and acquisition deals require more contracts, amendments, notices, and other steps than ever.
Our innovative OASIS Cycle process lets us deliver efficient, cost-effective contract transition and integration services. Our teams are co-led by an attorney and a project manager, and we take relationship management seriously. Our team has extensive experience with the corporate matrix and cross-functional cooperation, and we utilize our people, technology, and processes to get the best results.
Intuitive Edge is based out of Dallas, TX and offers merger and acquisition services, contract management consulting, contract management as a service, and data privacy services.
Contact the Intuitive Edge team to learn more about our services and let us make your project seamless
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