The importance of valuation for the mergers and acquisitions market
Posted: Mon Jan 20, 2025 4:23 am
Global businesspeople expect the mergers and acquisitions sector to grow by 33% over the next three years. Last year, there were US$3.8 trillion in mergers and acquisitions globally. These figures are from the global survey International Business Report (IBR) – A seller's market is set to continue after a big year for M&A, conducted by the consulting and auditing firm Grant Thornton. The sample included business leaders from 36 countries who shared their expectations for the sector in the near future.
Looking specifically at Brazil, the M&A (Mergers and Acquisitions ) market should be driven by foreign investors' acquisition interest in Brazilian companies.
In this scenario, valuation – a process that estimates the value uganda whatsapp data of a company in a systematic way through a quantitative model – becomes essential to carry out an in-depth evaluation and analysis of the company , considering the methodologies and study of variables to improve decision-making in the event of a merger or acquisition.
And why is carrying out a valuation important?
When we talk about mergers and acquisitions , the first aspect that should be considered in the financial analysis is whether the transaction makes sense from a strategic point of view for the organization. To do this, it is important to understand the business positioning, value drivers and its strategic objectives.
For example, if a large airline has a very competitive price, it presents an excellent acquisition opportunity. This offer does not mean that a leading company in the food sector should consider a merger or acquisition process with the airline.
The strategic assessment of the negotiation precedes any economic assessment and, therefore, the execution of the deal has to make strategic and industrial sense.
Once the strategic issue has been overcome, we move on to the financial issue, using the company's commonly accepted value calculation methodologies to evaluate the asset from an economic and financial point of view. After all, there is no justification for paying any amount for a company, even if the strategic alignment is perfect.
We usually employ valuation techniques based on the expectation of future value to be generated by the target company.
Main steps for carrying out the valuation
Know your company's positioning
Understand the risks and opportunities that exist in your business and market. Also check which aspects add value to your company and which ones could reduce its market value. By obtaining this information, you can draw up an improvement plan to reverse the negative aspects.
Looking specifically at Brazil, the M&A (Mergers and Acquisitions ) market should be driven by foreign investors' acquisition interest in Brazilian companies.
In this scenario, valuation – a process that estimates the value uganda whatsapp data of a company in a systematic way through a quantitative model – becomes essential to carry out an in-depth evaluation and analysis of the company , considering the methodologies and study of variables to improve decision-making in the event of a merger or acquisition.
And why is carrying out a valuation important?
When we talk about mergers and acquisitions , the first aspect that should be considered in the financial analysis is whether the transaction makes sense from a strategic point of view for the organization. To do this, it is important to understand the business positioning, value drivers and its strategic objectives.
For example, if a large airline has a very competitive price, it presents an excellent acquisition opportunity. This offer does not mean that a leading company in the food sector should consider a merger or acquisition process with the airline.
The strategic assessment of the negotiation precedes any economic assessment and, therefore, the execution of the deal has to make strategic and industrial sense.
Once the strategic issue has been overcome, we move on to the financial issue, using the company's commonly accepted value calculation methodologies to evaluate the asset from an economic and financial point of view. After all, there is no justification for paying any amount for a company, even if the strategic alignment is perfect.
We usually employ valuation techniques based on the expectation of future value to be generated by the target company.
Main steps for carrying out the valuation
Know your company's positioning
Understand the risks and opportunities that exist in your business and market. Also check which aspects add value to your company and which ones could reduce its market value. By obtaining this information, you can draw up an improvement plan to reverse the negative aspects.