Expanding businesses often employ M&A strategies for horizontal or vertical integration. It helps develop economies of scale and/or scope, reduce costs, improve product value, lessen competition, and gain access to talent from the acquired or merging companies. However, this assumes that the merging parties or the acquired company meets up to expectations and that the M&A goes as planned. Bad deals can hemorrhage cash and other resources, leading to eventual divestitures and a deteriorated financial profile to bargain with. Without due diligence and sufficient knowledge, M&A’s can become a potential corporate nightmare.
With accurate research and application, companies can overcome M&A risks and instead reap the benefits of healthy corporate growth. As a part of the evaluation process, it is imperative to perform cross-sectional analysis within respective industries and making relative determinations. Other evaluations include performing DuPont analysis, SWOT analysis, and Porter’s Five Forces analysis and calculating key financial indicators including but not limited to, P/E ratios, DCF (discounted cash flows), market shares, and EV/Sales ratios.
Starkmont Financial provides due diligence in research and analysis of M&A’s that fully investigates every material detail. With a clear understanding and background experience in multiple industries and with various companies, we have the expertise to clarify complicated M&A processes. Some material considerations we make in our strategy include industry potential, competitor analyses, long-term prospects, and compatibilities/synergies. With an emphasis on maximizing returns for your shareholders, Starkmont Financial will provide uniquely tailored guidance for M&A strategies.