Partner Mehmet Sengulen spoke with the Long Island Business News about a surge in Long Island M&A activity, up 12% over 2023. During an interview, he discussed some key considerations when preparing for a transaction.
What makes a successful M&A transaction?
The M&A process is both incredibly exciting and stressful with the potential for numerous pitfalls to crop up during each step of the deal process. Therefore, to navigate the M&A process successfully, it is imperative that businesses make sure targets not only look like a great strategic fit, but that they are a great strategic fit by conducting the proper due diligence from the start. This will allow businesses to prove that the transaction is financially sound, that all of the deal dynamics are correctly vetted, and a healthy post-merger financial position will ensue.
Due Diligence – What’s necessary and how?
Due diligence is vital to assess risks and validate the transaction’s value and involves the comprehensive review of financial statements, legal documents, operational processes, and compliance records. Key steps include quality of earnings analyses to understand revenue, profit, and liabilities; legal review to identify potential litigation or regulatory issues; and operational reviews to assess the viability of merging business processes and cultures. This is both a time and labor intensive process, so working with a partner that cannot only conduct these thorough evaluations, but help both parties make informed decisions and negotiate effectively is paramount.
Finance & restructuring – Best practices?
Tackling M&A finance and restructuring requires a multi-prong approach to help predict post-merger performance, maintain liquidity to cover integration costs, and optimize capital structure for debt and equity balance. It’s crucial to identify synergies for cost savings and revenue enhancement early, and to communicate transparently with stakeholders about financial impacts and timelines. Furthermore, businesses need to engage in thorough scenario planning and stress testing to prepare for various outcomes, and most importantly, continuously monitor and adjust financial strategies post-merger to ensure the long-term success of the combined entity.
Read the full content published by the Long Island Business News.
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