Navigating diverse team under the Corporate Finance roof within the major charted firms can be a nerve-wracking task for anyone. Analyzing and understand what each of the team can and cannot possibly offer can make a huge difference between living your dream job or losing it once for all. In this post, we are about to explain valuation work during a merger.

What Valuation Team do During the Merge?

The valuation team is responsible for providing a concise valuation of both current and potential assets and liabilities. Well, the valuation type differs from one company to another one totally depending upon the industry, characteristics, expertise and performance. Of course, the services may vary in the team but the revenue the team will calculate basically originate from the following:

  • Mergers
  • Acquisitions
  • Divestments

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Types of Valuation Methods Used for Valuation?

The most common valuation methods used by the organisation practitioners to evaluate investment banking, private equity corporate, mergers and acquisitions and other areas of corporate finance are; a) comparable company analysis b) DCF analysis and c) precedent transactions. Let’s dig deeper to know more about them.

First method: Comparable Company Analysis

Comparable company analysis is also known as peer group analysis where the valuation team compare the current value of the company with other companies who are serving in the same industry through different multiples such as enterprise value (EV) earnings before interest, tax and amortization (EBITA) and other organisational ratios. Attain corporate finance assignment writing help to learn more about the comparable company analysis.

Second method: DCF analysis

Discounted cash flow analysis is commonly known as the DCF method where the valuation team predict the future cash flow and discount it back to the current weighted average cost. In order to implement this method, professionals will need to have massive data about the company. It is often considered as one of the most detailed approaches used for the valuation and the result that is generated through such approach is accurate.

Third method: Precedent transactions

It is another very popular form of valuation where you compare one company to other similar companies who have been sold in the market. The valuation includes the price at which companies have been sold in the industry.

What are M&A Synergies and How Valuation Team Play a Role in This?

Synergies are an inseparable part of the merger and acquisition and often arise when there is a need for merging the efforts of both firms. The result generated through synergies is often higher than the sum of their separate efforts. There are multiple types of synergies that can be used to merge the efforts. Out of these the most common synergies includes cost saving and revenue upside rising. However, there are some softer approaches that can be used to make the merge successful and beneficial for both parties.

How Synergies are Estimated?

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