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Companies must conduct an analysis while looking at a merger to determine if the proposed deal is financially viable. To determine the viability of the merger of a merger, companies must analyze the previous financial data and then predict the future performance of the targeted companies. Mergers can dramatically change the organizational structure of a company, its financial standing, and market positioning. They also carry significant risks and present challenges in regards to integration, cultural alignment and customer retention.

Operational evaluation

Business analysts conduct thorough analyses and studies of the operations of a company they are interested in to provide prospective buyers with an in-depth picture of its strengths, weaknesses, and opportunities. This helps them identify areas for improvement and suggest strategies to improve efficiency and productivity.

Valuation analysis

The most important part of an M&A deal is determining the value the target company is worth to the company that is buying it. This is usually accomplished by comparing and contrast similar transactions in the market and precedent transactions, as well as performing an analysis of the cash flow discount. When conducting M&A analysis, it is important to use a variety of valuation methods because each has its own unique perspectives.

Analysis of the accretion/dilution

The accretion/dilution calculator is an important instrument to evaluate the effect of an M&A deal. It is a formula that reveals how the acquisition will impact the buyer’s pro-forma earnings per share (EPS). A rise in EPS can be considered beneficial, while an increase is regarded as dilutive. The accretion/dilution model is used to ensure that the price given to the target is a fair price relative to the value intrinsically.