Merger and Acquisitions (1) Determine the goals and objectives why buy?:…
Merger and Acquisitions
1) Determine the goals and objectives why buy?:
increase market access
increase market share
diversify their holdings
pre empt the competition
gain tax anvantages
incorporate synergies (operations, financial, marketing)
distibution channel expansion
reduction of fixed and variable costs
2)How much are they paying? Acquisition costs
Is the price fair?
How to pay for it?
Can they afford it?
if the economy sours, can they still make their debt payments?
3) Due diligence (reserach the company and industry)
security of its markets and customers
how the industry is doing and the company compared to the industry
how will our competitors respond to this acquisition?
any legal reasons why we shoudn't acquire it
how long they are planning to keep it
did they buy it to break it up and sell off parts of it?