The Role of Consulting in Mergers & Acquisitions

By Samrat Pradhan, Correspondent Saturday, 01 April 2023

Mergers and acquisitions are commonly assisted by consulting firms. Such efforts are difficult because you must deliver results rapidly while dealing with multiple stakeholders. You will not only aid in the selection of potential targets and business modeling in Excel, but you will also estimate the potential benefits of M&A, the firm's worth, and project the development of the acquired company.

Strategic investors and private equity funds both participate in M&A transactions (PE funds). Both have different motivations and strategies for benefitting from M&A. As a result, whether you work for a strategic investor or PE funds will greatly influence what you do as a consulting firm during M&A. Before we get into individual projects, we'll try to summarize their mergers and acquisitions strategy.

Strategic investors typically engage in M&A in order to expand and modify their company model while staying ahead of existing and potential clients.

M&A consultants help customers with all strategic and operational aspects of a (possible) transformation in their client's business as a result of a merger, acquisition, takeover, joint venture, or IPO. M&A consulting has grown in importance in the age of expanding private market M&A activity and public IPOs, and it now accounts for a significant portion of consulting projects delivered by prominent consultancies (e.g., Bain with its focus on work with PE funds, transactional advisory arms of Big 4 companies, M&A consulting boutiques).

The purpose of M&A consulting is to provide comprehensive strategic portfolio management and to secure the client's business's profitability and growth. M&A consultants assist buyer firms in their search for suitable takeover or merger candidates, build sophisticated spin-off or divestiture plans, evaluate the possible target company, and discover synergies that can be achieved as a result of potential M&A. Furthermore, they help transactions calculate a buy slide and handle all subsequent process steps, including post-merger integration (PMI). Moreover, M&A consultancies assist the seller side by seeking bidders and investors (e.g., as part of an exit strategy for owners or an investment fund), as well as ensuring a fair and smooth transaction closing for the seller.

An M&A transaction requires not just a great deal of information but also a great deal of experience. It is frequently necessary to go beyond the specific figures. M&A advisors assist their customers in understanding the contexts behind the numbers and connecting them with global investors, industry experts, or other firms around the world - including takeover targets - in order to maximize the value creation of a deal. It is especially important in the event of complicated constellations (e.g., joint ventures) and unique situations requiring immediate action (fire sales), while maintaining the confidentiality of the entire process.

It is vital to note that the number of stakeholders engaged from the consultancy side often determines the outcome of a transaction. Deep, specialized expertise in fields ranging from corporate administration to taxation, commercial law, and finance is frequently required. It is fairly uncommon for investment bankers to work with many consulting and law companies on a single transaction.

Furthermore, a successful M&A transaction necessitates competent mediation between the buyer and seller. M&A consultants are frequently a great value-add in negotiations, advising their clients on critical issues to be made during the parties' discussions. A business does not sell or acquire itself.


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