When your business is gearing up for a merger, there is a lot of information (and misinformation) flying around. You need someone who understands business transactions and how a merger may or may not benefit you. While you will do a lot of research beforehand, it is good to be able to sort out the truth from the not-so-true. Here are the five biggest myths about mergers.
Myth 1: Financial Advisor Advice Is Best
While having a group of financial advisors is a benefit, their presence will not lower your failure rate. Financial advisors have an interest in your company completing the deal and their advice should be taken as such. Create your own engagement letter that goes over the rules and procedures you are comfortable with. That way, if the bank miscalculates, you are safe from a possible gross negligence accusation.
Myth 2: All About the Valuation
While valuation can help in negotiations, it has little prediction on future success. Take discount rates with a grain of salt but do your homework and expect that the investment bank will have a lower WACC compared to a corporate buyer.
Myth 3: Legal Advice Won’t Lower M&A Failure
Legal advice is crucial to have when you are in the middle of a merger. An experienced attorney will be able to gauge your risk and help you through every step of the process. Legal advice is an investment, just like anything. Find an attorney you can trust and talk with about what your business goals are. They are required to act in your best interest and represent you and your company.
If your business is going through a merger and you need top-notch legal advice, contact Lucé Evans Law online today for assistance with your merger or call us at (972) 632-1300 to schedule your initial consultation.