In order to determine if a merger is financial sense, companies should conduct a thorough analysis. This includes a discounted cashflow (DCF), comparing and different trading counterparts, and previous transactions. It also involves calculating prospective synergies to be realized once the deal is concluded. This is a difficult step that requires the knowledge of an analyst from the financial sector who has experience in M&A modeling.
An analysis of dilution and accretion is vital to determine the profitability. This analysis determines whether or not the merger will increase or decrease the post-transaction earnings per share (EPS) of the company that is acquiring. It starts by estimating pro-forma earnings per share (EPS) of the buyer. A rise in earnings is thought to be a positive, while a decline could be viewed as negative.
The analysis must also consider the conducting vdr analysis for a potential merger effects of the merger on the competition between the merging firms and the market. This includes the possibility of negative effects on competition, for example, offers made to the newly merged company or a greater concentration of power in the market. While there is some research in this area but more research is needed to find quantitative analyses that are suitable for assessing the competitive impacts of horizontal mergers. Furthermore, the study should investigate what other barriers to coordination already exist in the market and how a merger would alter these.