People operating a company which is selling its businesses in a merge know how daunting the entire process can be at times. At the end of the day, they have a responsibility to ensure the best interests of all their stakeholders in any negotiations with a potential acquirer. Moreover, they have to follow the stringent guidelines which the authorities at the Federal or State level lay down to protect the public and small investors in the market. It may come as no surprise to find that recent studies show that approximately 85% of all corporate enterprises entering such transactions hire investment banking professionals to assist them.
Larry Polhill – Top 3 reasons why companies need to hire investment bankers in a merger agreement
Larry Polhill, a popular corporate finance expert from Arizona, says professional investment bankers play a critical role in the case of a corporate merger. Only such banking specialists can evaluate the correct value of both companies to the deal prior to entering such negotiations in the interests of the public, small investors and regulatory authorities. They also need to ensure such organizations follow to the letter the rules which Securities and Exchange Commission (SEC) prescribes to ensure proper compliance with various Anti-Trust laws. He points out the following 3 important reasons why companies entering into a merger agreement need to hire the services of an investment banker with a good reputation in the market:
- Better leverage
Companies selling their businesses in a merger agreement understand need to have a reliable professional by their side when conducting negotiations with a potential corporate buyer. This gives people operating such organizations the leverage they need during the talks to protect the best interests of their stakeholders. They are aware that investments bankers carry out thorough valuations of parties entering into such transactions so as to enable them to arrive at the proper price consideration. They also ensure the ‘Non-Disclosure Agreement’ both companies concur to is in order.
- Familiarity with the progress and legal requirements
Most investments bankers with a good reputation in the market in an in-depth knowledge of the market and various legal requirements companies entering into merger need to comply with. At the same time, many of these professionals have a reliable network of experts in various fields who can assist their clients in different ways during the process. Larry Polhill says this makes it less stressful and time-consuming for the companies undergoing such a procedure.
Investment banking professionals get a commission for their corporate clients when there are successful in securing the best deals in a merger agreement. The remuneration they receive is proportionate to the percentage of the highest price consideration they can get both parties to agree upon. This is why it is prudent on the part of both parties to hire the services of such experts.
People managing companies entering into merger agreements need to be very careful during the negotiation process. Larry Polhill says there may be various aspects which they are not aware of and can be held liable at a later stage. This is why it is also prudent on their part to hire the services of reliable investment banking professionals to help secure the best deal and protect the interest of their stakeholders. The above 3 reasons prove this point beyond any doubt.