Every business, big, small or startup, will undergo its lifecycle process of growth, maturity and decline. The phases are inevitable to occur, but key strategies offer more options for survival. Mergers and acquisitions are among those primary option courses, which makes it one of the most crucial decisions a business can make. In most circumstances, businesses will need to seek an M&A advisory in Singapore for intermediary transactions and increase the rate of successful deals.

Before we delve deeper into the M&A services and their importance, we must understand the basics and concepts of mergers and acquisitions—why it happens, and their advantages and disadvantages.

Understanding M&A

Businesses would often undergo various decisions, associations and innovations to experience expansion. Mergers and acquisitions (as we said earlier) are one of the primary options a company can go into to stimulate growth and augment its performance in the market for competitive advantage. It is the process where a business will consolidate its assets and firm to be absorbed by the other.

In most scenarios, synergy is one of the main highlighted points to initiate mergers and acquisitions where one company complements another’s weakness. Though, it can be seen sometimes as high-stake business deals by others. In this phase, M&A advisory services will be needed to represent the buyer and increase the transaction’s success. It boosts the market share and affects the companies’ supply chain involved in the success of merging and acquisition.

Growth in the market is one of the most common reasons some companies go for mergers and acquisitions.

Common Types of M&A

Consolidation

Consolidation is one of the most common types of mergers and acquisitions. It is where business stockholders will mutually agree and approve the consolidation, which results in a new corporate entity. Upon the succession of the deal, the involved stockholders will receive common equity shares for the newly created company. Like any M&A, it’s often the nature to opt for M&A advisory services for the transaction.

Asset acquisition

Asset acquisition can be self-explanatory. It’s where a company decides to acquire another’s assets with the approval and agreement of the target’s stockholders. It normally occurs during bankruptcy when other firms bid on the assets of a liquidating company.

Merger

Merging is when another company is absorbed or combined, uniting both where the other company will cease to exist upon the succession of the deal. The operating units of the now-defunct firm will be transferred or consolidated with the absorbing entity. Sound advice from an M&A advisor and approval of both boards of directors will be needed first.

Horizontal merger

A horizontal merger is a form of merger between two or more companies competing in the same industry. A fast-food chain “A” merging with another fast-food chain “B” is an example. These organisations will operate in the same space by creating a new supersized fast-food chain entity in the market.

Vertical merger

A vertical merger is slightly different from a horizontal merger. A vertical merger happens between two companies that provide various supply chains. This type is simple yet more common, and it is done to bring integration in the product or service for common needs of clients. Hiring an M&A advisor is still crucial, even for a simple merger and acquisition.

The Advantages & Disadvantages Of M&A For Businesses

Here are some of the common motivating advantages why business entities decide to merge and acquire:

• Eliminates market competition
• Better market share
• Acquire quality staff or experienced operating units
• Broader access to the customer base
• Quicker implementation of strategies
• Enhanced economic scale
• Enhanced distribution capacities

Disadvantages of M&A

• Increased legal costs
• Potential to lose opportunities
• Higher expenses in the transaction

It is often recommended to opt for M&A advisory services to sound decisions when tackling complex transactions and address difficulties and concerns.

Why Hire An M&A Advisor?

Going through merge and acquisition transactions alone can be risky. There are numerous obstacles and challenges involved during the selling process. It can derail the success of the deal without an experienced advisor. If IPO advisory services are for public exchange listing, an M&A advisor is the equivalent when it comes to merge and acquisition.

The transaction “when it comes to” merging and acquisition is often complex and lengthy. The entire process can take around months to a year before completion, and unforeseeable setbacks can compromise the profits and expected returns from the sale. Therefore, hiring an M&A advisory is essential for guidance and navigating your path in merge and acquisition deals.

Here are the other reasons why hiring an M&A advisor is integral for your business M&A deals:

• Provides broader access to a pool of buyers
• Maximise transaction value
• Prepares your company for the next step in buying or selling process
• Maintain the stability of the transaction phase
• Better transaction bandwidth
• Proactive approach towards merge and acquisition process
• Transparency to potential outcomes within the transaction
• Clears the ambiguity behind the complexity of merging and acquisition in assigning value, validation of results, etc.
• Manage the negotiations
• Act as a primary buffer between the seller and buyer

Hiring an M&A advisor is more than just delivering buyers at the table. Professional guidance and expert advice are the lifeblood for maximising the transaction and validating any potential. Selling a business is not in the same spectrum as real estate.

Maximising the valuation and getting the highest possible exit price for your company is among your primary mission and an M&A advisory has enough expertise to deliver the best solution for M&A endeavour.

If you are looking for an M&A advisory or forensic accounting services in Singapore, visit Nexia TS.