The following services are provided in order to illuminate the issue of M&A:
- the concept of M&A
- the different stages in M&A deals
- M&A image
- M&A success rates
The following points will be limited to the core aspects of M&A.
The concept of M&A
The term Mergers and Acquisitions, which is used in its English version also in German, refers to:
- the process leading up to company transfers
- the industry dealing with M&A and its service providers such as
- business lawyers
- investment banks (a sub-domain of “Corporate Finance”)
- other professionals.
The different stages in M&A deals
- Selection of the target company
- Discussions with the owner of the target company, acting through M&A consultants or investment banks
- NDA (non disclosure agreement)
- LoI (letter of intent)
- Due diligence on target company
- Structuring of the deal taking account of the results of due diligence
- Valuation and negotiations on price
- Signing of contract
- Registration, if required, and approval of the deal by the Swiss Competition Commission (WEKO)
- Transfer of ownership and payment (closing)
The procedures falling between due diligence and closing will often differ and will be presented by the vendor consultant.
Media-sensitive M&A deals involving major corporations will often attract criticism from all quarters, including politicians, trade unions and the general public.
Reasons for this include:
- the strategic goals of the new owner
- restructuring involving cost savings and staff redundancies.
M&A success rate
M&A are often less successful than expected:
- economies of scale may not be created
- coordination costs may have been over-compensated
- potential synergies are used to justify the premium paid (share premium above market value paid with the purchase price).
Various studies have concluded that around two thirds of all transactions end in failure.