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Role of Mergers and Acquisitions (M&A) Advisory Consulting Services

Role of Mergers and Acquisitions
Published on Nov 18, 2024

Mergers and Acquisitions (M&A) refer to impactful actions taken by firms to grow their business, expand their range of activities, target new geographical areas, or consolidate their positions against competition. However, merging or acquiring other businesses is easier said than done. It requires a very intricate process that includes financial modeling, legal procedures, cultural alignment, and planning. 

Mergers & acquisitions consulting firms are an essential part of this process. They are usually individual experts or firms that have developed skills to guide and assist firms throughout the transaction process. Be it when shopping for a smaller firm, merging with another player, or divesting from a specific business unit, an M&A advisor coordinates to make sure that the process is smooth and effective while delivering the highest value possible for everyone involved. 

Mergers and Acquisitions (M&A) Consulting Services 

The term M&A advisory refers to transactional professional services provided to firms to buy, sell, or merge (combine) businesses. Such specific advisory services frequently include: 

  • Planning: Understanding the vision of the business in the long run and determining how the merger or acquisition can help the firm achieve those objectives. 
  • Financial Modeling: Understanding the business case and financials of the mergers or acquisitions. 
  • Market Mapping: Determining potential sellers or buyers because of the market situation and other factors within the industry. 
  • Due Diligence: An in-depth appraisal of the deal's economic, legal, and operational sides. 
  • Negotiation and Deal Structuring: Defining the deal in a way that all parties are equally safeguarded. 

M&A advisory firms may serve any industry, such as health, information technology, manufacturing, and finance. Their particular skills enable businesses to easily navigate the complexities of M&A deals. 

What is an M&A Advisory? 

M&A advisory refers to the service industry that deals with the buy-and-sell construct of businesses, including mergers. These processes are complex and multidimensional, and without advisory services, companies may not be able to execute these transactions successfully. Presented below are the key features of merger and acquisition advisory services in detail: 

  • Strategic Planning 

Strategic planning includes having a vision for the enterprise as well as understanding the structure of the company’s goals. This helps ascertain the importance of a merger or acquisition. Advisors collaborate with the company’s management to appreciate their vision, ascertain growth prospects, and map out how the transaction can contribute to the company’s strategy. 

Read more: What is Investment Banking - Definition, Types, Role & Importance

Financial analysis is an integral part of M&A advisory. This activity consists of analyzing the target companies’ finances. For a transaction to occur, balance sheets, income statements, cash flow, and other financial metrics are evaluated to ascertain whether the activity will be profitable and viable for the business. 

  • Market and Competitive Research 

Market analysis involves evaluating the market environment, industry structure, and competition to identify possible buyers or sellers. This task aids in preparing a shortlist of appropriate merger or acquisition candidates and forecasting damages to be incurred in a particular deal. 

  • Due Diligence 

Due diligence is a specific and detailed examination of the work's financial, legal, and operational nature. There is an active verification of potential concerns, costs, obligations, and efficiencies gained after and during the deal, ensuring all transaction details have been accounted for. 

  • Negotiation and Deal Structuring 

M&A advisory negotiates the deal and also structures it. This encompasses writing the integrating clauses that safeguard the party’s expectations. Diplomacy ensures a tradeoff between the objectives, benefits, risks, and decisions made. 

Most M&A advisory companies have a wide range of sectors, including M&A Consulting in Healthcare, technology, manufacturing, and finance industries. With their increased expertise and industry knowledge, they assist companies in navigating the challenges of M&A transactions. 

What does a Merger and Acquisition Advisor Do?

An M&A deals in the transactional stages of buying/selling companies. Here is a breakdown of their responsibilities: 

  • Identifying Opportunities: Through the knowledge and connections to the industry, Advisors target acquisition candidates, merger partners, or buyers that support an organization’s goals. 
  • Conducting Valuations: They do comprehensive valuing steps in order to ascertain how much a business is worth and factors such as assets, liabilities, anticipated growth, and the existence of the market. 
  • Due Diligence: This is where an individual or organization profoundly analyzes the financial statements, legal documentation, customer contracts, and operational performance of the respective company to identify potential risks or hidden liabilities. 
  • Negotiating Terms: As a participant in the dealings, advisors make sure that the provisions are not one-sided but are reasonable and beneficial to the dealings. They have a say on everything from prices to post-transaction duties. 
  • Regulatory Compliance: M&A advisors make sure that the business deal follows the law at all levels, such as international and domestic law on competition and tax. 
  • Post-Merger Integration: In the case of business buying and selling, after the transaction closes, Transaction Advisory Services have to be involved in merging the operations of the two companies/businesses and ensuring a smooth application of processes. 

mergers & acquisitions consulting

Why do You Need an M&A Advisor? 

Accessing a mergers and acquisitions expert may determine the overall success of a transaction. Below are the given outlines of how companies will need the services: 

  • Special Knowledge: M&A transactions are highly specialized and deal with the transaction's financial, legal, and operational aspects. Advisors possess the required expertise to browse and navigate these matters. 
  • Objective Decision-Making: Business decisions can be emotionally charged, which can sidetrack them from the goal of the transaction. Advisors can aid businesses in making the right decisions by providing clients with an unbiased perspective. 
  • Effective Work Flow: Advisors are well versed in managing challenging deals, and with this experience, they can ensure that the transaction is executed efficiently and meets the deadlines. 
  • Minimize Losses: Advisors make thorough risk estimates and do due diligence to reduce the chances of negative consequences from the transaction. 
  • Increased Wealth: Because of their expertise, M&A advisors aggressively negotiate for their clients,  ensuring optimal financial goals. 

Read more: Private Equity Firms Are Leveraging Data and Analytics to Manage Their Portfolio

How is an M&A Advisor Different from an Investment Banker? 

M&A advisors and investment bankers provide crucial services in corporate transactions, but they differ in multiple significant aspects. Knowing these aspects allows firms to choose the right professional to meet their requirements. 

  • Services Performed 

M&A advisors are specialized providers of services regarding mergers and acquisitions or divestiture. They provide strategic growth or divestment planning for a company and may customize their services to meet the specific requirements of the client. On the other hand, investment bankers provide a wide range of services, such as equity financing, IPOs, debt issuance, trading, and mergers and acquisitions. 

  • Clients 

M&A advisors engage with clients on a personal and strategic level. They seek to develop long-term relationships by providing well-aligned advice. Investment bankers, in contrast, may have a more technical relationship as they focus on executing transactions within specified periods. 

  • Deal Size 

Different M&A advisors and investment bankers deal with different sizes of deals. M&A Advisors typically focus on small to medium-sized transactions for firms looking for relevant business mergers and acquisitions or selling businesses. As for investment bankers, the work is usually associated with enormous deals worth hundreds of millions or even billions of dollars, including deals involving multinational corporations and complex financial transactions. 

  • Fee Structure 

The differences between M&A advisors and investment bankers are also due to the differences in fee structures. M&A Advisors typically charge through a blend of retainer fees and success-based commission, which is paid after the deal. On the contrary, investment bankers tend to focus on a success-based fee structure, in which they charge a percentage based on the value of the deal. 

These differences allow businesses to utilize the M&A advisor services or Investment Banking Services, depending on the nature of the transaction that will be conducted. This facilitates the ability of the enterprise to achieve its business strategy and financial goals. 

Cost of M&A Advisory Services 

Pricing for M&A advisory services greatly varies depending on deal size, expertise needed, and transaction complexity. These services are further broken down into these: 

  • Retainer Fees 

These are fixed monthly payments made to the advisor each month during the engagement period. These serve as compensation for the time and effort utilized in the project. The advisor earns from the retainer covering expenses from initial meetings and strategic planning to research. The range of retainer fees varies based on the advisor’s standing in the market, the scope of services rendered, and the expected duration of the project. 

  • Success Fees 

These are performance payments earned as a percentage of the transaction’s sum. These are mostly set from 1%-5%, as the majority of deals are not too complex. The percentage might be lower for larger transactions due to the sheer number of deals; however, with smaller businesses, high percentages are generally expected. These fees are usually collected when the deal is closed and the advisor has achieved success, which motivates them to work in their client’s best interest. 

  • Additional Costs 

Apart from retainer and success fees, other expenses are incurred in the provision of M&A advisory services. These costs include: 

  • Legal Fees: The fee paid for the services of an attorney – for the preparation and scrutiny of agreements, filing of documents, and evaluating the risks involved. 
  • Due Diligence Costs: Costs incurred for auditing the target company’s financial, legal, and operational records. 
  • Transaction-Related Expenses: These include expenses incurred for the valuation, business locality surveys, travel, and most importantly, all activities of an operational nature necessary for the business deal. 
  • Value versus Cost 

The engagement of an M & A advisor requires an investment, but it is worth it. Most ‘M&A Boston practitioners will tell you that experienced advisors pay for themselves. Their work goes beyond just the preparation of reports and offering analysis. Advisors determine strategy, reduce risk exposure, and manage finances to achieve specific goals. Their involvement in negotiation, due diligence, and deal structuring gets the clients value for money and results at a much better future value, making them core to the entire M&A exercise. 

By carefully evaluating these factors, it becomes easy to select an M&A advisor who is capable of steering a business through the complex processes associated with mergers and acquisitions for optimum outcomes. 

  • Cost of Mergers & Acquisitions Consulting 

Changing Costs for mergers and acquisitions consulting services might have a wide range of costs depending upon the industry of the business, the deal itself, and the size of the companies involved. Listed below are some of the factors that M&A Consultancy pricing is based on: 

  • Size and Scope of the Deal  

Value and the Complexity of the Transaction For Deal Execution in Investment Banking, where due diligence, financial modeling, valuation, and strategic planning are incorporated, prices can blur significantly. On the other hand, for smaller deals, where a limited set of services such as valuation and legal compliance are offered, costs are likely to be much lower in comparison. 

Types of Services Provided 

Some of the consultancy services provided include:  

  • Valuation and Financial Analysis: Your consultant will assess the fair market value of the company you seek to acquire. 
  • Due Diligence: A thorough investigation related to financial, legal, operational, and even compliance aspects. 
  • Strategic Advisory: Making decisions on deal specifics such as the structure, negotiation tactics, and post-deal blending strategies. 
  • Regulatory and Tax Compliance: Ensuring that national and international laws are adhered to and targeting suitable taxation levels.  

Every single service is bound to impact the pricing model. The more elaborate the package is, the greater the fee will be. 

  • Hourly Rates and Retainer Fees: M&A consultants may charge on an hourly basis or a retainer basis. Depending on the qualifications and experience, hourly charges range between $150 and $1,000. As for the higher firms' costs, they are usually on the higher end of the spectrum due to their extensive resources and global presence. 
  • Industry and Geographic Factors: Geographic location affects the fees charged as they are more expensive in developed markets such as the US or UK than in emerging economies. Furthermore, niche knowledge consultants specializing in technology, healthcare, and energy can significantly impact the consulting rates. 
  • Success-Based Fees: M&A consultants may charge success fees, which are a certain percentage of the total deal value after completion. These fees often range between 1% to 5% based on the transaction's intricacy and size. 

mergers and acquisitions advisory

Other Fees 

There are other expenses that may be considered in addition to the consulting fees: 

  • On-site evaluations such as travel and accommodation. 
  • Legal consultants, accountants, and valuation experts. 
  • Software tools and technology that are used for reporting and analysis. 

Read more: What is Pitchbook in Investment Banking - Pitchbook Examples, Template and Sample

How to Choose the Right M&A Advisor?

Choosing the appropriate mergers and acquisitions advisory will highly affect the likelihood of the deal succeeding. An appropriate recommendation from an adviser gives proper strategic direction, ensures intelligent portfolio management for private equity firms, and provides other services that automatically determine the deal's success. Here are factors that will help outline the right M&A advisor for the company: 

  •  Experience and Expertise 

Most emphasis should be placed on advisors who have handled similar transactions in terms of volume and difficulty. Exposure to such transactions makes them understand how other players in the market would react and how to anticipate challenges. Additionally, relevant industry experience is extremely helpful for uncovering hidden business opportunities. While looking at potential advisors, find those who are already seasoned in your industry. 

  • Reputation 

You can measure your advisor’s reliability and effectiveness through their reputation. The first thing that should be reviewed is the advisor’s professional reputation, which can be seen in client testimonials, case studies, and references. The feedback from former clients works wonders concerning the advisor’s professionalism and results. Rewards, affiliations, and industry recognition can also speak for the advisor’s reputation and credibility. 

  • Strategic Fit 

Your M&A advisor should be knowledgeable and align with your firm's goals, philosophies, and business strategies. The best advisors will understand your goals and will look for ways to help you achieve them in a customized manner. Ensure they care enough to be interested in your business’s long-term goals instead of completing the transaction only. 

  • Global Reach 

If your transaction is multi-national or cross-border in nature, it needs to have international experience and a global network. This type of advisor will help you handle legal, cultural, and economic differences in various markets, which provides for easy transactions. 

  • Fee Structure 

Addressing fee structure from the beginning is essential to avoid misunderstandings or hidden costs. Explain how they charge, such as a retainer, success fees, or other costs. Ensure that the cost aligns with your budget. Clarity in this matter will help build confidence in each other and prevent unwanted surprises later. 

Conclusion - M&A Advisory 

The importance of M&A advisory services cannot be neglected in today’s world. These advisors are invaluable partners in a deal, whether it is structuring a merger to take advantage of new market opportunities or managing the intricacies of an acquisition deal where stakes are high. 

They add value to businesses at all levels. For businesses exploring how to add more value to their transactions, working with reputable firms like SG Analytics, where these professionals are located, makes all the difference. 

With the change in the global economy, the significance of planned M&A activities is rising. Employing advisors ensures that businesses achieve their objectives and grow without being challenged by the regulations enforced in the new environment. 

The M&A consulting services are the ultimate game changers to every company's business transformation to become a successful brand. 

Partner of choice for lower middle market-focused investment banks and private equity firms, SG Analytics provides offshore analysts with support across the deal life cycle. Our complimentary access to a full back-office research ecosystem (database access, graphics team, sector & and domain experts, and technology-driven automation of tactical processes) positions our clients to win more deal mandates and execute these deals in the most efficient manner.      

About SG Analytics      

SG Analytics (SGA) is an industry-leading global data solutions firm providing data-centric research and contextual analytics services to its clients, including Fortune 500 companies, across BFSI, Technology, Media & Entertainment, and Healthcare sectors. Established in 2007, SG Analytics is a Great Place to Work® (GPTW) certified company with a team of over 1200 employees and a presence across the U.S.A., the UK, Switzerland, Poland, and India.          

Apart from being recognized by reputed firms such as Gartner, Everest Group, and ISG, SGA has been featured in the elite Deloitte Technology Fast 50 India 2023 and APAC 2024 High Growth Companies by the Financial Times & Statista.     


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