Mergers and acquisitions (M&A) involve combining two businesses into one. The consolidation of organizations and their assets is typically achieved through various financial transactions such as mergers, acquisitions, tender offers, purchase of assets, and consolidation. If you are in the process of undergoing a merger or acquisition, a certified public accountant (CPA) can help ensure that the process goes smoothly. From conducting due diligence to advising your company on tax advantages, the experienced CPAs at Diener & Associates can help you minimize risks and maximize value during M&A.
What Are Mergers & Acquisitions?
Mergers and acquisitions refer to the consolidation of companies. Specifically, the term merger refers to the joining of two companies into one entity, while acquisitions occur when one company is purchased outright and taken over by another. M&A transactions often create more value than when each company operates individually. Mergers and acquisitions can take place by purchasing common shares or assets or by exchanging shares for shares or assets. There are several types of mergers and acquisitions that cover various types of transactions. The most common M&A types include horizontal mergers, vertical mergers, concentric mergers, conglomerate mergers, leveraged buyouts, and friendly or hostile takeovers.
How Do Mergers & Acquisitions Work?
Synergy is critical for most M&A deals, meaning that the transaction must increase efficiency and revenue when the two companies merge. Synergy can be achieved in many ways, including by increasing profits or cutting costs. When two companies are combined, the resulting business may be worth more and able to generate larger profits. When successful, a merger or acquisition can improve a company’s performance, accelerate growth, create tax advantages, and promote strategic realignment. In fact, some of the largest conglomerates in the world are a result of a merger or acquisition.
The Role Of A CPA During Mergers & Acquisitions
Many businesses going through a merger or acquisition count on certified public accountants to aid them in the process. Both buyers and sellers can benefit from using an outsourced CPA during the M&A process. For example, buyers who use a CPA become better equipped to structure their business for tax efficiency. Buyers can also benefit from unrecorded assets, financial and tax due diligence, liabilities, valuation, and identification. They may also experience other key benefits, such as analysis of quality earnings and the evaluation of working capital and cash flow.
Sellers can also benefit from using a CPA during a M&A transaction. A pre-sale inspection of operations and a financial statement analysis can help ensure that sellers receive a satisfactory and fair payment that is based on the business’s true value. Other benefits for sellers include structuring for tax efficiency, accurate entity valuation, and net worth schedules. CPAs can also respond to buyer questions on behalf of the seller and assist with pre-deal packaging.
Get Started With Diener & Associates Today
If your organization requires assistance with a merger or acquisition, consider speaking with an industry professional with experience in this type of commercial transaction. The experts at Diener & Associates will help assess where your business stands and provide advice on difficult decisions during the process. For more information on how enlisting an outsourced CPA during a merger or acquisition can help drive your business forward, or to get started working with Diener & Associates, call us at 703.386.7864 or schedule a consultation online today.