In M&A scenario, let's assume that company A (advised by GS) and company B (advised by JPM) are merging.
To be precise, Some of stakes at B is acquired by A. Clearly, there are seller and buyer. Buyer being A & seller being B.
In this case, how does financial valuations come into play?
Does both GS & JPM value both A and B? Or GS only values A and JPM only values B or vice versa?
Just need some clarification here.
Thanks!
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GS (Buy-Side M&A Advisor) - Trying to negotiate the lowest price for company B
JPM (Sell-Side M&A Advisor) - Trying to negotiate the highest price for company B
so basically, both GS and JPM are valuing Company B ONLY. No valuation is needed for Company A, right?!
The buy side advisor would likely provide pre and post acquisition valuations of the acquiring company. Think a standard merger model.
Yes. Merger model will incorporate both A & B.
Then, general valuation method such as DCF, comps, and precendent transaction will probably not going to be perforemd for company A (Buyside)?
The valuation of A is relevant only insofar as the sell-side advisor may/will attempt to argue that B has synergies that make A+B greater than the standalone value of A and B.
DCF will be relevant for merged Newco (basically A) to determine present value of synergies.
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