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Finance > M & A/JV > Strategy
Merger Strategy
Various aspects of the M & A deal such as valuation, legal compliance, accounting and negotiation are highly specialised areas. The advisors are often investment and merchant bankers who are well versed with the M&A market players and have experience and knowledge. Advisors take fees for performing various tasks:
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Target identification
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Determination of appropriate price
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Structuring the finance
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Assisting in negotiation
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Advising on post-merger integration
The fees charged by the intermediary are often negotiable. The Lehman formula (also known as 5-4-3-2-1) formula is most popular.
If
the target is being sought, the seeker should carefully state the
objectives. For example, the objective(s) may be one or more of:
- Increasing market share in domestic market,
- Eliminating a competitor,
- Enhancing production capacity,
- Entering fast growing markets abroad,
- Leveraging distribution channels,
- Better control of critical input material and components etc.