SponsoredA year after Covid-19 started to disrupt our lives, and with the turmoil that the second wave of infections is causing, it is difficult to base any growth plans on the overall expected GDP growth.ntraction in the economy experienced in 2020, growth must be a theme for 2021. An important lever for growth has resulted from the pandemic’s impact: in April 2020, the Competition Commission said it expected a surge in mergers & acquisitions after the pandemic had taken its course.
There are still headwinds awaiting many businesses, especially those less able to adapt to the new normal. This creates opportunities for these alpha companies to step in and target businesses affected by the pandemic fallout. Add unfavourable gearing to this scenario, which further diminishes the balance sheet, and the weaker companies become prime targets for competitors to drive growth.
Considering the synergies such as cost, technology and culture between the two companies is imperative. They must be clearly identified and distinctly linked to balance sheet and income statement benefits. A clear understanding is needed of how the transaction will change or augment the acquiring company’s position in its value chain, as well as any contingent liabilities and risks embedded in the transaction.