Mergers and acquisitions (M&A) refer to transactions between two companies combining in some form. Although mergers and acquisitions (M&A) are used interchangeably, they come with different legal meanings. In a merger, two companies of similar size combine to form a new single entity.


On the other hand, an acquisition is when a larger company acquires a smaller company, thereby absorbing the business of the smaller company. M&A deals can be friendly or hostile, depending on the approval of the target company’s board. 


In an M&A transaction, the valuation process is conducted by the acquirer, as well as the target. The acquirer will want to purchase the target at the lowest price, while the target will want the highest price.


Thus, valuation is an important part of mergers and acquisitions (M&A), as it guides the buyer and seller to reach the final transaction price. Below are three major valuation methods that are used to value the target:


  • Discounted cash flow (DCF) method: The target’s value is calculated based on its future cash flows.
  • Comparable company analysis: Relative valuation metrics for public companies are used to determine the value of the target.
  • Comparable transaction analysis: Valuation metrics for past comparable transactions in the industry are used to determine the value of the target.

 

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As an expert in advising small/medium-sized businesses to enter into transactions involving sales, mergers & acquisitions, liquidations, and dissolution, we strive to provide our clients with the highest level of service. We offer an intimate atmosphere where our client's needs are always top priority and give them the support they need to succeed.


With so many firms in today’s market, it can be difficult for a small business owner or entrepreneur to know where to turn when they want help selling their company. As an IBBA (International Business Brokers Association) member, we have become leaders in brokering transactions involving acquisitions, sales/mergers, and liquidations nationwide. We are also proud MBBI (Midwest Business Brokers & Intermediaries) members,  which provides a network of advisors and brokers throughout the Midwest.

If you have a difficult time determining what your enterprise is worth, let's find out together! Contact one of our M&A advisors today.

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We work with many self-funded searchers and HNWI's seeking to fulfill their dream of entrenpreneurship through acquisition. Our team also works directly with different private equity and fund managers as an intermediary by facilitating the sourcing of opportunities which match their search criteria. The M&A group of professionals has been dedicated to providing quality service and results. The firm's reputation for integrity and dependability is unparalleled in the industry. We work with a wide range of buyers - from sophisticated investors looking for an attractive return on investment opportunity to owner-operators seeking their next business venture. ____________________________________________________

Whether you are exploring the option of acquiring a business or you are already under LOI, our team can help! Contact an advisor today!

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