MERGERS & ACQUISITIONS
MERGERS & ACQUISITIONS
Does your business have earnings greater than one million dollars?
If yes then your company could become a target for acquisition by industry players and could benefit from BLJ's merger and acquisition expertise. At this stage your business is generally too large for most individual investors to purchase or finance on their own.
Or do you want to grow your company and need to raise capital?
If yes, BLJ's mergers and acquistions expertise can benefit you. We are your business broker and investment banking connection. On the buy-side we act as your corporate development department to find you deals to acquire - BLJ does the legwork, contacting board of directors of prospective sellers.
WHAT IS AN ACQUISITION?
In an Acquisition, typically a larger company buys a smaller company and the smaller company is then a subsidiary of the larger company and the smaller company often assumes the name of the larger company. Typically the acquisition is that of 100% of the shares/stock or operating assets of the target company. Management here is often retained.
WHAT IS A MERGER?
In a Merger, two similar-sized companies are combined together to create a new and third company.
The two original companies then cease to exist as they have merged to create a third. Often this fact can be reflected in a new name for the third company. Example if company ABC merged with XYZ, then the new third company may be called ABCXYZ. In such merger, one of the management emerges as the dominant management.
TYPES OF MERGERS
STATUTORY MERGER: A True Merger, also known as a Statutory Merger, occurs when a private company mergers with and into a public company and the private company then becomes extinct while the public Company is the surviving entity.
REVERSE MERGER: A Reverse Merger is where a private company acquires a majority of the shares/stock in a public shell company, which is then combined with the purchasing entity. It is a way for private companies to go public without an IPO. This is typically a simpler, shorter, and less expensive process than that of a conventional IPO.
REVERSE TRIANGULAR MERGER: A Reverse Triangular Merger is the formation of a new company that occurs when an acquiring company creates a subsidiary, the subsidiary purchases the target company and the subsidiary is then absorbed by the target company.
DIRECT MERGER: A Direct Merger (also called Forward Merger) is where the target company merges with and into the buyer, the buyer assumes all of the target company’s assets, rights and liabilities and the target company ceases to exist as a separate entity.
FORWARD TRIANGULAR MERGER: A Forward Triangular Merger involves the acquisition of a target company by a subsidiary of the purchasing company. The only difference between a forward triangular merger and a direct merger is that a subsidiary of the purchasing company, not the purchasing company itself, is the entity that acquires the target.
forward triangular merger diagram.
TAX LOSS MERGERS
Tax loss mergers are acquisitions where the Buyer pays the seller extra for the value of tax loss carry forward. This type of merger is used as a tax shield and works only if the buyer and seller is in the same business line and the buyer buyer takes over management of target company.
A split-off is a viable divestment strategy where part (namely subsidiaries or divisions) of a conglomerate is worth more than the whole. Example, if a conglomerate trades at six (6) times EBITDA, but has subsidiaries buried within it that
separately would trade at ten (10) times EBITDA, then BLJ may advise such a client to split-off the subsidiaries
and sell them separately. For this to work, it is important to make sure the split-off is not a taxable event.
Contact BLJ today for expert mergers and acquisition guidance.