What Kind of Analyses Would You Do When Advising the Target In An M&A Deal?
Thinking of what would be value-add when advising the company being bought in an M&A deal (Target, not Acquiror).
Would showing Working Capital needs be value add? Or would it just be limited to showing various purchase price considerations, and what management's stake in the company would look like?
Any color on this would be greatly appreciated - thank you.
When advising the target in an M&A deal, the value-add goes beyond just showing purchase price considerations or management's stake. Based on the most helpful WSO content, here are some key analyses and areas of focus that would be valuable:
Preparation for the Sale Process:
Working Capital Analysis:
Valuation and Purchase Price Considerations:
Marketing the Target:
Identifying the Right Buyers:
Scenario Analysis:
Risk Mitigation:
Post-Transaction Considerations:
By focusing on these areas, you not only add value to the target but also increase the likelihood of a successful transaction.
Sources: Knowledge Sharing: Corporate Development / M&A, Private Equity Interview Questions - 13 Topics to Know, Overview of Sell-Side M&A, As an M&A Investment Banker, What Value Do You Actually Add?, Q&A: Big Four Valuation Associate - Deciding Whether This Job Is Right For You
Hey, just to generate a bit of activity on your thread, you might benefit from a little more context here. Where does the question come from? Are you just curious or is there a specific reason (your comment about WC seems a little...specific?)
If you're talking about advising a target in the context of an organised sellside, that's one thing. Advisory in the context of takeover defence is quite another. Showing working capital needs is relevant to a degree in both, but honestly not the major focus in either (exceptions aside). Happy to comment a bit more understanding the context and what you're really asking about.
Thanks!
Yes, so to clarify, I just mentioned WC because it came to mind.
I was wondering, in a traditional M&A process, if you're specifically advising the target, what kind of deliverables/analysis you actually do?
It seems that the advisor for the Acquiror would be doing a lot of the M&A Accretion dilution modelling, or would the advisor to Target also do this?
Any context would be helpful.....
Can consider the following,
1) Valuation analysis for an indicative range
2) Implied transaction metrics at various PP
3) IRR / NPV analysis for various PP
4) Operational and financial benchmarking
5) Potential buyers
6) Recent M&A themes in the space
7) Process approach
8) Tentative timeline
9) Appendix: case studies, premium analysis, comps, percendents
hope this is helpful!
Super helpful, thank you.
What about when the deal has actually been announced?
For example, if I read in a PR that Company X is acquiring Company Y, and Company Y (Target) has hired ABC Bank as advisors. What's Target's advisor actually doing when a deal has been announced for Target? Same things you mentioned?
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