A well-conceived analysis for an upcoming merger could be vital to the successful completion of an acquisition. Custom B2B market research is crucial to provide accurate and reliable market insights that can help to identify the major areas of due diligence.
Mergers can transform the organization’s operational structure, financial position, and overall strategic direction. They can also create opportunities for growth, synergies, and cost savings. Companies looking to pursue M&A must be ready to deal with the challenges that mergers can create risks to integration, for example, and clashing cultures.
The most crucial part of making preparations for M&A is performing an accretion/dilution analysis. This is a process of estimating pro forma net income and then calculating pro-forma earnings per share (EPS). A rise in EPS can be considered positive, whereas the decrease in EPS is regarded as dilutive. Wall Street is often against any deal that dilutes, since it increases the risk associated with the acquisition.
Another crucial aspect to consider is whether there exists evidence of coordinated market effects, or whether the proposed merger could result in a coordinated interaction. Coordinating could occur through coordination of pricing, allocating customers or the coordination of capacity. In general, in order for coordinated interactions to occur, it is necessary to have clear information about who serves whom, and the reasons for this. It can be difficult to determine the evidence needed for coordination on the current market. However, a review of a possible merger could help determine whether a deal could lead to coordinated interactions.