Emerging & Frontier Markets Insights

This section discusses all sides of why mergers and acquisitions (M&A) happen, including key factors in mergers, advantages and disadvantages of mergers, M&A strategy considerations etc.

The buyer of a business wants to ensure that no major material issue will arise after merger transaction takes place. Therefore the buyer will insist on a thorough due diligence process in order to know about any such issues and to negotiate with the seller on better terms before completing any merger or acquisition. Due diligence process is conducted to determine the value of the target company, structure the deal, and identify any problems. The target’s business operations, financials, and legal documentation should be thoroughly examined.

The purpose of this section is to introduce reader to the main stages in the Mergers and Acquisitions (M&A) process from beginning to end. As a rule, an M&A transaction is complicated process, which may take months, or even years to finalize. The end of the M&A process certainly continues after the final signing of agreements since acquired or merged companies should be properly integrated.

M&A Process - Preparing to Sell or Buy

Both seller and buyer should prepare before selling or buying a business. The Seller must make his/her company look as attractive as possible to the Buyer; while the Buyer must do some work to determine the proper selection criteria for the company. Presale preparations include such main items as:

There are three main approaches to company valuation: comparable companies analysis, precedent transactions analysis and discounted cash flow (DCF) analysis.

Comparable companies analysis

Comparable companies analysis is based on the idea that similar companies share key financial and operational characteristics, risks and performance drivers. Comparable companies analysis involves selecting peer companies and then compare them and the target based on various financial ratios and key performance indicators. Then, trading multiples are calculated for the peer companies and applied to the target’s relevant financial indicators to come up with a valuation range for the target.

In this post, I want to share five templates of Non-Disclosure Agreements (NDA), also known as a Confidentiality Agreements (CA). Since, my primary language of communication is Ukrainian and Russian, there are NDA templates in Ukrainian and Russian as well as in English languages. If you have NDA templates in other languages besides English, you are more than welcome to share them with me and I will add your NDA templates to this post. Or you may just create your own Insight post and share NDA templates in your language. In my next post, I am going to share templates of sell-side and buy-side mandates that I came across in my work.