3 Common M&A Mistakes

The merger and acquisition process is fairly lengthy, ranging from 6 months to a year and even more depending on the scale of the companies involved in the process. There are multiple considerations that both parties must make before coming to an agreement, and certain restrictions are also applied that can potentially bar involved companies from completing transactions.

Poor Valuation

Calculating the value of a business is very difficult, being a relative value at times. But with enough paperwork, you can develop a fair estimate that can help you get the right amount of money for your business or for the one you’re trying to acquire.

Business brokers are required for this process, as they can guide you better on what the actual value of a certain company is before you start sending in a Letter of Intent. Only after you’ve developed an accurate estimate should you proceed forward.

Poor Due Diligence

The valuation of the company isn’t enough to sign up a deal with them. It is important that proper auditing is done, including looking into legal issues and other liabilities that the company may have. A classic example is when the Bank of America purchased countrywide Financial Corporation in what seemed like a brilliant deal. Still, the number of liabilities attached to it led to bankruptcy for the latter.

Not Looking into Regulations

One of the biggest problems faced by companies during the M&A process is not having the right legal counsel to guide them regarding the laws that surround the industry. Apart from preparing the right documentation, legal advisors must inform owners about the competitive laws that can prevent complete mergers and acquisitions. The FTC prevents companies from acquiring majority market sales and forming monopolies that could dictate pricing and may require divesting the business.

Gulfstream Mergers and Acquisitions has been in the business since 2003, helping hundreds of companies evaluate their position and value in their market, as well as make sales and purchases for the M&A process.

Whether you’re looking to sell your business or expand market share, our business brokers and financial counsel can provide you with accurate market valuation with our 11-step process so that you get the best price. If you’re in New Jersey, South Carolina, North Carolina, Florida, Alabama, West Virginia, Pennsylvania, Tennessee, Georgia or Ohio, get in touch with us right today.