One way to grow and scale your business is through mergers and acquisitions. Buying an existing business or joining with an existing business is a great way to increase your market share and reach.
Mergers and Acquisitions (M&A) is an important strategic option for small businesses and nonprofit organizations. While these opportunities may seem simple in the beginning, it is important to understand all of the variables that can affect the outcome. The Wright Firm, will help you navigate through various stages of a merger and acquisition and assist you from the initial offer through closing.
Shahara is experienced in working with private for profit and nonprofit organizations through organizational growth and provides a high level of individualized attention. Clients appreciate and value her commercial approach and the expertise she brings as she helps them navigate through challenging transactions and matters. Her focus is on ensuring the delivery of the absolute best outcomes for her clients in a timely manner.
For more information about buying a business read this Blog Article. For more information about pricing and how to work with The Wright Firm, PLLC, Contact Me!
For Profit Mergers & Acquisitions:
- Drafting and Reviewing Sale Documents
- Non-Compete Agreements
- Confidentiality Agreements
- Due Diligence Review
- Closing Supervision
Nonprofit Mergers:
- Prepare Board Resolutions
- Assist with negotiating Merger Terms.
- Assist with the Due Diligence Process
- Draft new/revised articles and bylaws
- Honoring donor intentions
- Consulting and assisting with combining and streamlining operations
Nonprofit Dissolutions:
- Prepare Board Resolutions
- Plan of Dissolution
- File Articles of Dissolution
- Dissolving contracts
- Honoring donor intentions
- Providing stakeholder “talking points” language and communications
Mergers and Acquisitions FAQs
Mergers and acquisitions (M&A) is a broad term that refers to the consolidation of two or more companies.
Mergers are transactions in which two companies combine to form a new company. In a merger, the two companies typically dissolve their separate corporate entities and create a new entity.
Acquisitions are transactions in which one company purchases another company. In an acquisition, the acquiring company typically takes over the target company’s assets and liabilities.
There are many reasons why companies engage in M&A transactions. Some of the most common reasons include:
- To grow: M&A can be a way for companies to grow their businesses by acquiring new customers, products, or markets.
- To expand into new markets: M&A can be a way for companies to expand into new markets without having to build their own operations from the ground up.
- To achieve synergies: M&A can be a way for companies to achieve synergies by combining their operations and reducing costs.
- To protect against competition: M&A can be a way for companies to protect themselves from competition by acquiring a competitor.
Here are some of the most common risks associated with M&A:
- Overpaying for the target company: This is one of the most common risks in M&A. If the acquiring company overpays for the target company, it can significantly reduce the value of the transaction for the acquiring company’s shareholders.
- Inadequate due diligence: Due diligence is the process of assessing the target company’s financial condition, operations, and prospects. If the acquiring company does not conduct adequate due diligence, it may be unaware of hidden liabilities or other problems with the target company. This can lead to significant losses for the acquiring company.
- Integration problems: Integrating two companies can be a complex and time-consuming process. If the integration is not done properly, it can lead to problems such as employee turnover, loss of customers, and decreased productivity.
- Cultural clashes: When two companies merge, their cultures may clash. This can lead to problems such as employee morale, productivity, and decision-making.
- Loss of focus: After a merger, the acquiring company may lose focus on its core business. This can lead to problems such as decreased profitability and loss of market share.
These are just some of the risks associated with M&A. It is important for companies to carefully consider these risks before entering into an M&A transaction.
Mergers and acquisitions (M&A) can have a significant impact on employees. Some of the most common effects of M&A on employees include:
- Job losses: Mergers and acquisitions often lead to job losses. This is because the acquiring company may not need as many employees after the merger.
- Changes in job duties: Mergers and acquisitions can also lead to changes in job duties. This is because the acquiring company may want to streamline operations or change the way the business is run.
- Relocation: Mergers and acquisitions can also lead to relocation. This is because the acquiring company may want to consolidate operations or move to a different location.
- Salary changes: Mergers and acquisitions can also lead to salary changes. This is because the acquiring company may have different salary structures or pay scales.
- Benefit changes: Mergers and acquisitions can also lead to benefit changes. This is because the acquiring company may have different benefit plans or policies.
- Uncertainty: Mergers and acquisitions can create uncertainty for employees. This is because employees may not know what the future holds for their jobs, their duties, or their compensation.
The effects of M&A on employees can vary depending on the specific circumstances of the transaction. However, it is important for employees to be aware of the potential effects of M&A so that they can be prepared for any changes.
Mergers and acquisitions (M&A) are two terms that are often used interchangeably, but they actually have different meanings.
A merger is a transaction in which two companies combine to form a new company. In an acquisition, one company purchases another company. The acquiring company typically takes over the target company’s assets and liabilities.
Here is a table that summarizes the key differences between mergers and acquisitions:
| Characteristic | Merger | Acquisition |
| Definition | Two companies combine to form a new entity. | One company purchases another company. |
| Result | A new company is created. | The acquiring company takes over the target company’s assets and liabilities. |
| Example | H.J. Heinz and Kraft Foods merged in 2015. The result was The Kraft Heinz Company. | Microsoft acquired LinkedIn in 2016. |
Mergers and acquisitions (M&A) are valued using a variety of methods, including:
- Discounted cash flow (DCF): This method values a company based on the present value of its future cash flows.
- Asset-based valuation: This method values a company based on the value of its assets, such as its property, plant, and equipment.
- Market-based valuation: This method values a company based on the price-to-earnings ratio of similar companies.
- Competitive bidding: This method values a company based on the bids that are received from potential acquirers.
- The valuation method that is used will depend on the specific circumstances of the M&A transaction. For example, if the target company is a mature company with a stable cash flow, the DCF method may be the most appropriate valuation method. However, if the target company is a growth company with significant intangible assets, the asset-based valuation method may be more appropriate.
The valuation of M&A transactions can be a complex and subjective process. It is important to use a variety of valuation methods and to consider the specific circumstances of the transaction when valuing a company.
Due diligence is the process of gathering and evaluating information about a company or asset before making a decision to acquire it. In the context of mergers and acquisitions, due diligence is used to assess the financial, legal, and operational risks of the target company.
The due diligence process typically involves the following steps:
- Gathering information: The first step is to gather as much information as possible about the target company. This will be done by providing the target company with a list of questions and requests for documents that will allow you to assess the viability of the company.
- Analyzing information: Once the information has been gathered, it needs to be analyzed to identify any potential risks. This analysis can be performed by the acquirer’s own internal team or by a third-party due diligence firm.
- Making a decision: After the analysis has been completed, the acquirer needs to make a decision about whether to proceed with the acquisition. This decision will be based on the acquirer’s risk tolerance and the potential benefits of the acquisition.
Due diligence is an important part of the mergers and acquisitions process because it helps the acquirer to understand the risks involved in the acquisition and to make an informed decision about whether to proceed.
Here are some of the specific areas that are typically reviewed during due diligence:
- Financial: The acquirer will review the target company’s financial statements to assess its financial health. This includes reviewing the company’s income statement, balance sheet, and cash flow statement.
- Legal: The acquirer will review the target company’s legal documents to assess its legal risks. This includes reviewing the company’s contracts, intellectual property, and employment agreements.
- Operational: The acquirer will review the target company’s operations to assess its operational risks. This includes reviewing the company’s production processes, marketing strategies, and customer relationships.
The due diligence process can be a complex and time-consuming process, but it is an essential part of the mergers and acquisitions process. By conducting thorough due diligence, the acquirer can mitigate the risks involved in the acquisition and make an informed decision about whether to proceed.
Mergers and acquisitions (M&As) can be a complex and risky process, and there are many common mistakes that can be made. Here are some of the most common mistakes made during M&As:
- Underestimating the cost of integration: Integrating two companies is a complex and time-consuming process, and it can be more expensive than expected. It is important to factor in the cost of integration when making an offer for a target company.
- Failing to do adequate due diligence: Due diligence is the process of gathering and evaluating information about a company before making an acquisition offer. It is important to do adequate due diligence to identify any potential risks associated with the target company.
- Paying too much: It is important to set a realistic price for the target company. Paying too much can lead to financial problems for the acquirer.
- Not having a clear plan for integration: It is important to have a clear plan for integrating the target company into the acquirer’s business. This plan should include how the two companies will be managed, how the cultures will be merged, and how the employees will be affected.
- Not communicating with employees: It is important to communicate with employees about the M&A from the beginning. This will help to reduce uncertainty and anxiety among employees.
- Not managing expectations: It is important to manage expectations about the benefits of the M&A. It is important to be realistic about the challenges of integration and the time it will take to realize the benefits of the M&A.
By avoiding these common mistakes, acquirers can increase their chances of success in M&As.