- M&A, or Mergers and Acquisitions, refers to the consolidation of companies or their major assets through financial transactions between companies. The key points about M&A are: Mergers involve two companies of similar size combining to form a new single entity. Acquisitions involve a larger company acquiring a smaller company. 34
- M&A transactions can be friendly (with the target company's approval) or hostile (without the target's approval). 4
- The main reasons companies pursue strategic M&A include achieving synergies through cost reductions or revenue increases, diversifying their business, gaining market power, and obtaining tax benefits. 4
- M&A transactions can be structured as a stock purchase, where the acquirer buys the target company's shares, or an asset purchase, where the acquirer buys specific assets of the target. 4
- Valuation is a critical part of M&A, with the acquirer trying to pay the lowest price and the target seeking the highest price. Common valuation methods include discounted cash flow, comparable company analysis, and precedent transactions. 4 In summary, M&A refers to the process of companies combining through mergers or acquisitions, driven by strategic and financial motivations, and involving complex valuation and transaction structuring. 134
Glossary
M&A
Definition
The financial field dedicated to buying and selling businesses