When companies are involved in the process of evaluating potential mergers, a thorough analysis is required to determine if the merger is sense financially. This includes analyzing a discounted cash flow (DCF) model for each company, comparing and contrasting it with trading counterparts and previous transactions. It also involves calculating future synergies that will be realized once the deal has been concluded. This is a difficult process that requires the expertise of an analyst from the financial sector with experience in M&A modeling.
A dilution/accretion analysis is crucial to determine the profitability. This analysis determines whether the merger will enhance or decrease the earnings per share (EPS), post-transaction, of the acquirer. It starts by estimating the pro-forma earnings per share (EPS) of the buyer. A rise in earnings is considered a positive, whereas a decrease would be considered a negative.
The analysis should also take into consideration the impact of the merger on the nature of the competition between the merging firms and the market. This includes the potential for adverse effects to competition, such as offers made to the merged company or an increased https://www.mergerandacquisitiondata.com/ power concentration on the market. There is some research on this subject however more work is required to identify quantitative analyses that are suitable for assessing competitive impacts of horizontal merges. The research should also examine other obstacles to coordination that already exist on the market and how a merger might change this.