FAQ
Get clear answers to common M&A questions. Learn key steps, risks, and strategies to navigate the process and make smart decisions.
- 01
M&A stands for Mergers and Acquisitions. In a Merger, two companies combine into one, while in an Acquisition, one company buys another. The purpose of M&A is usually to grow the business, gain an edge over competitors, or enter new markets. The process involves planning, valuation, negotiations, and integrating the companies involved.
References: Hayes, A. (n.d.). Mergers and acquisitions (M&A): Types, structures,valuations. Investopedia.
https://www.investopedia.com/terms/m/mergersandacquisitions.asp
- 02
M&A process follows these 10 steps:
1. Develop an acquisition strategy: Define your goals, such as expanding product lines or entering new markets.
2. Set search criteria: Narrow down potential targets based on factors like profit margins and location.
3. Find potential targets: Use your criteria to identify and evaluate companies.
4. Plan the acquisition: Initiate contact with companies to see their interest through the idea.
5. Valuation analysis: Assess the target’s value by analyzing its financials.
6. Negotiate terms: Present your offer and negotiate terms based on your analysis.
7. Due diligence: Thoroughly examine the target’s operations, finances, and assets to verify its value.
8. Finalize contracts: Determine a purchase agreement, either for assets or shares.
9. Plan the financing: Finalize how the acquisition will be financed.
10. Close and integrate: Complete the deal and begin merging the two businesses.
References: Mergers acquisitions M&A process. (2024, August 2) Corporate Finance Institute.
https://corporatefinanceinstitute.com/resources/valuation/mergers-acquisitions-ma-process/
- 03
Common reasons for M&A deal failures include:
Lack of industry knowledge or misunderstandings between parties.
Failure to align on key issues such as valuation or internal challenges.
Sticking to outdated methods and not anticipating future risks.
Problems during the integration phase, such as mismatched corporate cultures or poor communication.
To avoid these pitfalls, we prioritize industry expertise, detailed negotiation, clear communication, and structured integration plans. Our team, including legal experts, support the process from start to finish.
- 04
Here are our M&A service lists that we provide one-stop solution to our client:
M&A/JV advisory: From feasibility studies to deal closure, we provide a one-stop solution.
Partner searching: We identify potential partners and facilitate negotiations.
Strategic advisory: We offer research and insights to guide your decisions.
Financial advisory: Our understanding of local markets supports client’s decision-making.
Post-merger integration: We assist in the seamless integration of companies after the deal.
Turnaround/revitalization: We provide professional guidance to help businesses in Southeast Asia overcome challenges.
- 05
Here are the top M&A trends in 2024.
Energy Transition: Government policies are driving M&A deals in clean energy sectors as companies move away from fossil fuels.
Resources : Global M&A in 2024: Five trends to watch. (n.d.).
AI and Tech: AI is pushing M&A activity, but increased regulations, especially in the EU and US, are complicating deals.
Resources : Global M&A in 2024: Five trends to watch. (n.d.).
Supply Chain: Companies are securing supply chain resources, particularly in electric vehicle production, to stay competitive.
Resources: The biggest M&A trends for 2024. Benchmark International. (2024, April 22).
https://www.benchmarkintl.com/insights/the-biggest-ma-trends-for-2024/
Healthtech: Advances in healthcare, particularly biotech and remote patient technology, are driving deals in this sector.
References: Ketchum, D. Healthcare M&A: Market trends & opportunities to know for 2024. (2024, April 15).
https://www.caplinked.com/blog/healthcare-ma-trends/
Telecommunications: Investments in 5G are spurring mergers and partnerships in the telecom sector.
Resources: Financier Worldwide. (n.d.). International M&A Trends: 2024 a year of recovery?.
https://www.financierworldwide.com/international-ma-trends-2024-a-year-of-recovery
ESG (Environmental, Social, and Governance): These factors are becoming central to M&A evaluations, influencing the deal strategies.
Resources: Deloitte. (n.d.). 2024 ESG in M&A Trends survey.
https://www.deloitte.com/cbc/en/services/financial-advisory/analysis/global-esg-ma-survey.html
- 06
The M&A process can take from six months to several years, depending on the complexity of the deal. It’s wise to set a target closing date, but anticipate potential delays and build extra time into your timeline.
References: Weller, J. (n.d.). How Long Does the M&A Process Take?. Smartsheet.
https://www.smartsheet.com/content/merger-and-acquisition process#:~:text=The%20length%20of%20the%20M%26A,build%20in%20time%20for%20change.
- 07
The M&A's main risk are include:
Overvaluing the target: Overly-optimistic projections or inadequate due diligence can lead to overpayment and lower returns.
Integration failures: Challenges in merging operations or mismatched company cultures can cause complications.
Unable to capture synergies: Failure to realize the expected benefits of the deal can result in underperformance.
Inadequate due diligence: Insufficient review of the target may lead to critical risks, such as hidden liabilities.
References: Donnelly, S. 10 risks of mergers and Acquisitions & How to mitigate them. Finance Alliance. (2024, September 11)
https://www.financealliance.io/risks-of-mergers-and-acquisitions/#1-overvaluing-the-target-company
- 08
Main risk assessments in M&A address various areas:
Financial risks: Evaluate profitability, cash flow, and liabilities.
Legal and regulatory risks: Ensure compliance with laws and contracts, and assess potential litigation.
Operational risks: Analyze the target’s operations and synergies with your business.
Cultural and organizational risks: Determine how well the companies’ cultures align.
Synergy risks: Evaluate the potential cost savings, revenue growth and efficiencies from the combining two companies.
References: M&A risk assessment (2023, June 28). M&A Leadership Council.
https://macouncil.org/ma-risk-assessment-highly-confidential
- 09
Due diligence is a crucial procedure in M&A, conducted before a merger or acquisition. It involves reviewing and auditing the target company to make precise decisions and maximize transaction value.
There are five main types of due diligence.
Tax Due Diligence: Ensures all taxes are paid and examines future tax obligations.
Legal Due Diligence: Reviews contracts, regulatory issues, and legal risks to ensure compliance.
Financial Due Diligence: Assesses the company’s financial health, including income, expenses, debts, and assets.
Operational Due Diligence: Evaluates the company’s day-to-day operations for seamless post-transaction functioning.
Information Technology (IT) Due Diligence: Examines IT systems, focusing on security and identifying potential risks.
Resources: M&A due diligence - everything you need to know. Synoptek. (2023, November 19).
https://synoptek.com/insights/it-blogs/due-diligence-in-mergers-and-acquisitions/
- 10
M&A deals offer opportunities for market expansion but also come with regulatory risks. Regulatory considerations in M&A are include:
Antitrust Laws: Ensure that mergers don’t harm market competition by obtaining clearance from authorities.
Data Privacy Regulations: Safeguard sensitive data during transactions to avoid penalties and reputation damage.
Foreign Investment Regulations: Comply with country-specific investment laws to prevent delays or fines.
Securities Laws: Follow securities regulations, including accurate reporting and insider trading rules in order to avoid legal issues in the future.
Labor and Employment Laws: Adhere to labor laws, review employee contracts, and ensure fair employment practices to minimize legal disputes.
References: Hofer, M. Regulatory considerations in M&A. (2023, July 3).
https://www.bymichaelhofer.com/articles/legal-considerations