1. Company Valuation Experts
One of the most important initial steps to get right when looking to acquire or sell a company is to establish its market value.
Company valuations are used to determine the value of a company based on a number of factors, including its operational performance.
In some cases, this valuation will also include what’s referred to as “enterprise value”, which includes all assets and liabilities of the company.
Common approaches to business valuation include a review of financial statements, discounting cash flow models and similar company comparisons.
Both parties have to agree on the price and by hiring an expert company valuer you can ensure that you are getting the best price whether buying or selling. In addition, proper valuation of a company is also important for tax reasons, and Company Valuation Experts will often work in tandem with other roles in your M&A team, such as M&A Accountants and Lawyers.
During an M&A deal specialist M&A accountants assist in translating multivarious business assets into a financial model that makes sense for both the acquiring and selling parties.
This often involves different types of accounting, from push-down accounting (assets and liabilities are calculated to reflect the purchase cost rather than historical costs) to equity accounting (working out the difference between liabilities and assets).
One of the key skills for an M&A accountant is being able to communicate complex financial situations to their clients. Indeed, the more complex the transaction is, the more imperative it is that the client understands the various financial elements in order to close a good deal.
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Complex business transactions such as M&A deals require careful construction and implementation to ensure their success. Hiring a specialist M&A lawyer as part of your team will ensure that all elements of the acquisition or selling process are completed correctly and with due diligence.
Given the fact that M&A deals can straddle multiple markets and jurisdictions it is imperative that you hire a lawyer to fill one of the roles in your M&A team who is best placed to maximise tax and legal advantages in the resultant business entities.
Other roles include advising on the structure of the transaction, drafting and negotiating the sale and purchase agreements, and negotiating shareholder agreements between the shareholders.
4. Investment Bankers
Sometimes M&A deals require external financing, particularly if the transaction is using a leveraged buyout model, whereby the party buying uses a small amount of their own capital in the deal but gets financing on the assets of the company they are buying.
Investment bankers in the M&A space also often act as the primary point of contact between the buyer and seller, and help negotiate the final terms of the deal. In addition, you may wish to contract an Investment Banker earlier on in the M&A process when sourcing out deals.
Investment Bankers can produce an Information Memorandum on a company, a document that summarizes the business plan of the company, its operations, its history, what it offers to potential partners, projected profit and loss statements for the next five years.
The information memorandum needs to be prepared by a professional with proper guidance from someone who has knowledge of the business it will be selling. For this reason here at Fintalent we seek to engage with Investment Bankers with professional experience from other sectors before transitioning into finance.
5. Financial Advisors
There are two main types of Financial Advisors involved in M&A deals; an Industrial Financial Advisor and a Corporate Financial Advisor.
An Industrial Financial Advisor’s role within the M&A team is to review financials, industrial strategy and future prospects, operations and supply chain operations, technology and patents, regulatory issues. A corporate finance M&A advisor would provide financial advice on valuation and financing structure for the deal.
However, they would only be needed if your company wants to raise money for a transaction through debt or equity financing, whereas an industry-specific advisor might be more appropriate if you want them to help with valuation due diligence.
The third type of advisor is particularly useful for business owners looking to sell – a Personal Financial Advisor. They can play a key role within the M&A team in ensuring that you have a plan in place to allocate the wealth generated by the sale of a business. For small business owners invariably a large part of their wealth is their company, so when this wealth is liquidated or exchanged it is very important to develop a strategy moving forward.
If you are looking to build an M&A team, you came to the right place. Check out our top tier M&A Consultants for hire.