Lawyers and MBAs throw around the term “M&A” as if it is as ubiquitous as “LOL.” “M&A” stands for Mergers and Acquisitions. But what are mergers and acquisitions? They are two very different terms with differing meanings.
A Merger is a combination of two companies. The Selling company is absorbed by the buying company. One of the companies “survives” while another is the “non-surviving” company.
An Acquisition is the purchase of an asset or company.
The structure of a deal, whether it is set up to be a merger or an acquisition, has an impact on the tax, accounting, and financial condition of the resulting company. Another element that must be worked out is how the deal is financed. Typically acquisitions are paid for using cash, which may be structured as a purchase contract to be paid over time at a specified interest rate. The seller then often walks away from the business altogether, although he may be paid as a contractor or employee for a time. In contrast, mergers may be paid for with any combination of cash, stock in the “Surviving” company, or other assets.
In this day and age, everything can be for sale if the money is right, and this includes your business. How can you figure out if the price is a good one?
You can start with the FREE EBITDA calculator offered by Goosmann Law Firm. This calculator determines your business’ Earnings Before Interest, Taxes, Depreciation and Amortization, and will help you determine your company’s current value. Our calculator will provide you with
- Total net profit
- Total EBITDA
- Total Benefits and Add-Backs
It also breaks out additional information that will be crucial to getting the right price for your company.
Be prepared for tomorrow. Download our EBITDA calculator today.