When companies are involved in the process of evaluating potential mergers and acquisitions, a thorough analysis is required to determine whether the merger is in sense financially. This involves a discounted cashflow (DCF) as well as comparing and contrasting trading comparables, and precedent transactions. It also involves calculating future synergies to be realized when the deal is closed. This is a complicated step that requires the knowledge of a financial analyst who has expertise in https://www.mergerandacquisitiondata.com/the-importance-of-conducting-vdr-analysis-for-a-potential-merger/ M&A modelling.

An analysis of dilution and accretion is vital for determining the profitability. This analysis determines whether or not the deal will boost or decrease the post-transaction earnings per share (EPS) of the company that is acquiring. The process begins by estimating the pro-forma net income to arrive at the acquirer's pro-forma Earnings per Share (EPS). An increase is regarded as an accretive increase, while an increase is considered dilutive.

The analysis should also consider the effect of a possible merger on the current structure of competition in the market and between the merging companies. This includes the possibility of anti-competitive effects, including offers for the newly merged company as well as an increased concentration of power in the market. While there is some research on this topic but more research is needed to determine the right quantitative analysis to evaluate the competitive impact of horizontal mergers. Furthermore, the study should look at what other obstacles to coordination currently exist in the market and how a merger would change this.