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Crucial Steps in a great Analysis for your Potential Combination


A potential merger analysis entails a number of key element steps in the procedure. These include homework and research to identify potential candidates, valuation (including the underlying value of assets), and economic modeling.

Value, in a nutshell

The critical first step to the value process is always to examine the point company’s materials and financial obligations. These factors will help you decide whether the offer is worth carrying out or not. If you’re buying a property company, for example , in that case your starting point is always to look at the net book benefit of it is assets and subtract the amount of the liabilities. You have to to modify your valuation volumes depending on the property’s market value and also other factors, such as bad debts.


A key consideration in a potential merger is actually the blended entity’s income per promote will increase or perhaps decrease as a result of the transaction. This really is referred to as EPS accretion/dilution increase in calculated by separating pro-forma net income by pro-forma shares.

Typically, a reduction in EPS is regarded as dilution. Dilutive transactions happen to be frowned upon by many Wall Street shareholders.

Competitive Results

Another important aspect in a potential merger is definitely the market’s condition of competition. This may be inspired by the “Number of Competitors Matters” theory, which in turn states that firms contend more strongly when you will discover more opponents in the market.