Financial Analysis for a Potential Merger

In order to determine if a merger would make hop over to this web-site financially sense, companies need to perform a thorough analysis. This includes a discounted cashflow (DCF), comparing and contrast trading comparables, as well as precedent transactions. It also involves calculating potential synergies that can be realized once the deal has been completed. This is a complex step that requires the expertise of an analyst with financial experience who is experienced in M&A modeling.

A dilution/accretion analysis is vital for determining the profitability. This analysis determines whether or not the deal will boost or reduce the post-transaction earnings per share (EPS) of the company acquiring. It starts by estimating pro-forma earnings per share (EPS) of the acquirer. An increase in earnings is considered a positive while a decrease would be considered a negative.

The analysis should also take into account the impact of the merger on the competition between the merging companies and the market. This includes the possibility of negative effects for competition, such as offering for the merging company and increased power concentration in the market. While there is some research in this area however, more research is required to find quantitative analyses that are suitable for assessing the impact on competition of horizontal mergers. In addition, the research needs to look at what other obstacles to coordination exist already in the market and how a merger might alter this.