Merger and Acquisition Modeling

Prior to an acquisition or merger, a merger model (a type of financial modeling) will be used to analyze the combination of the two companies in a proposed deal. The primary objective of M&A modeling is to determine how the acquisition may impact the earnings per share (EPS) of the acquiring company, and how this EPS would compare with others in the same industry. However, M&A models can offer deeper financial insights in any given deal. The financial insights and projections arrived at within the model can help inform whether or not to proceed with a merger or acquisition.

Mergers and acquisitions are team activities. Surgeons don’t go into the operating room without nurses and anesthesiologists. Business owners shouldn’t enter into an agreement to sell or merge their business without M&A support.

The market for advisor practices was set to be a record year in 2020 based on closing 2019 out on a high note, with valuations and deal terms as good as they have ever been. Fast forward three months and COVID-19 has eroded all these gains and left many advisors reeling and re-evaluating. As an advisor thinking of phasing out over the next few months or years, you are probably thinking, “Great, now what?”