Corporate Business Valuation for Mergers and Acquisitions

Two or more business entities can get together and create a new entity. This is known as a merger in corporate parlance. Acquisition is when one company or entity is taken over by the other. Mergers and acquisitions are common occurrences in the corporate world. It is important to do a proper valuation of the companies involved before the process starts. This is the objective of corporate business valuation.

If you have a company that is participating in a merger or is acquiring another company, you need to carry out a business valuation. It would be advisable to get this done through a professional firm that can-do a thorough valuation. You can consider corporate business valuation for the best results.

Mergers and Valuation

A merger happens when two or more corporate entities combine into one corporate body. Their assets need to be transferred along with the liabilities to the new entity. For this, it is important to carry out a comprehensive valuation of all the corporate entities that are involved in the merger process. This is essential to be able to carry out the merger process effectively.

Acquisitions and Valuation

An acquisition in the corporate world is where one company takes over another company. Unlike a merger, the first company or entity retains its identity while taking over the identity of the other entity. It is essentially a takeover. Here, it is important to carry out a valuation of the company being acquired. This will help the larger company to determine if it is worth going ahead with the acquisition process.

Types

There are three types of mergers and acquisitions, all of which call for different methods of corporate business valuation:

• Horizontal integration: This is where similar types of firms dealing with the same product types come together to be merged or where one is acquired by the other.
• Vertical integration: This is where two firms in the same sector but carrying out different processes come together.
• Conglomerate integration: Here, unrelated businesses come together as a part of the merger and acquisition process.

Corporate Business Valuation

The valuation of the corporate entities can be done in different ways like finding out its liquidation value or finding out its value as a going concern. Different methods are used by the appraisers to carry out valuation depending on the needs.

The above information would have helped you understand the importance of corporate business valuation for mergers and acquisitions so that you can keep them in mind if these activities need to be done in your business.