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Merger Business Valuations

Are you about to merge your business with another?  Mergers are based on the idea that bringing two businesses together

Mergers are different to an acquisition - there is a combination of the equity in a manner that creates more value.  A business valuation helps owners understand the key issues to manage in order to make the merger a success.

In-depth business valuations give you the confidence and the insights to make sure any proposed merger makes sense and increases the value of the combined business.

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Key Business Valuation Issues With Mergers?

  • What is the stand-alone business valuation of each business?

  • What synergies will result from the merger and what is the strategic value of the merger?

  • Will the merger be funded from cash only or a mix of cash and shares?

  • Will share issues result in dilution of dividends to particular shareholders?

  • Are there any balance sheet issues of the combined entity?

  • What key metrics need to be measured to ensure the merger creates value?

Our business valuations deal with these issues and others that arise during the merger process.  You need to know about these issues early and not in the middle of negotiating a deal.

We have the expertise and experience in carrying out business valuations for merger and acquisition purposes.

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Business Valuations For Mergers

Warren Buffet has said: "Price is what you pay - value is what you get"

When two businesses merger the key is to identify and unlock opportunities and synergies that would otherwise not happen.  Delivering synergies and new opportunities is what makes mergers so attractive and powerful in creating more value than the individual businesses.

But how do you work out the value of the merged business?

The key steps in any merger business valuation are:

  1. Establish the business valuation of each stand-alone business.

  2. Identify the synergies and opportunities and create projection scenarios that describe the financial impact in a merged business.

  3. Determine the business ​valuation at a cost of capital that reflects the merged entity.

  4. Take into account issues of new shares and the impact on shareholder dividends.

There are also some key metrics that should be identified that will make the merger a success.  These will often include:​

  1. Timelines of merger actions and processes.

  2. Cultural combination.

  3. Systems integration.

  4. Revenue forecasts.

  5. Employee productivity.

  6. Cost savings and synergy improvements.


A business valuation completed before you lock in a deal gives you more options to make the best decisions that create the most value.

What Do Business Valuations Provide In A Merger?

  • The price range for the combined business.

  • Impact on shares on issue and other balance sheet issues.

  • What key metrics ensure that value is created post-merger.
  • The features of both businesses that make it a good merger.

Business valuations when buying a business provide:

  • Confidence to negotiate.

  • Reasoned arguments against claims each party may raise during negotiations.

  • Maximum valuations that should be agreed for each business and the impact on shares on issue.

  • Valuation improvement strategies from synergies and opportunities.

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