Share
Mergers and Acquisition (M&A) refer to the process of consolidating two companies or major assets of company through financial transactions into one.
The primary goal behind M&A activities is to create greater value together than as separate entities. This strategic move is often driven by the pursuit of wealth maximization, operational efficiency, competitive advantage or market expansion. Companies continuously explore M&A opportunities to access new markets, enhance capabilities or gain scale in an increasingly competitive landscape.
Type of M&A Transactions
Common types of transactions that under M&A including:
Type of Mergers & Acquisitions
| Type | Description | Example |
| Horizontal | Two companies in the same industry come together with similar products/services. This reduces competition and increases market share, revenue, or profit. | CIMB Bank merging with Southern Bank in Malaysia. Both were financial institutions offering similar banking services |
| Vertical | Two companies join forces in the same industry but they are at different points on the supply chain
Improving logistics, consolidating staff & perhaps reducing time to market the products |
Example a clothing retailer buys over a clothing manufacturing company |
| Concentric | Two companies that has similar or vice versa kinds of customer base but provides different services | A sports apparel company acquires a fitness app both target health-conscious consumers but offer different value |
| Conglomerate | Two companies in different industries join forces or one takes over the other so that it can broaden their range of services & products | Grab, a ride-hailing and digital services platform, expanded into the grocery retail sector by acquiring Jaya Grocer |
Forms of Acquisition
Share Purchase
The acquirer buys the share of the target, acquiring both its assets and liabilities.
Asset Purchase
The seller remains as the legal owner of the Entity. The buyer purchases the sellers’ individual assets of the company such as equipment, licenses, goodwill, customer lists and inventory.
Advantages for Mergers & Acquisition
M&A Valuation
In an M&A transaction, both the acquirer and the target company conduct valuation exercises to assess the company’s worth.
This process enables both parties to establish a common understanding of value, forming the basis for negotiations and the ultimate agreement.
M&A Valuation Methods
Discounted Cash Flow (DCF) Value is calculated based on its future cash flows
Comparable company analysis Relative valuation metrics for public companies are used to determine the value
Comparable transaction analysis Valuation metrics for past comparable transactions in the industry used to determine the value
The process for Merger & Acquisitions deal
How ECOVIS Malaysia Can Support Your M&A Journey
At ECOVIS Malaysia, we provide end-to-end support throughout your M&A transaction. Our services include:
Whether you’re looking to buy, sell or merge, ECOVIS able to guide you every step of the way.
