Transaction Advisory Services - Everything You Need To Know
January 21, 2021
What are Transaction Advisory Services?
For any company exploring expansion or sell-out, it's crucial to enter into promising and fruitful joint ventures, mergers or acquisitions. But that is not the only key to a successful inorganic growth. Soft aspects, such as examining and analyzing the risks, tax evaluation, legal and regulatory conditions, social and cultural implications of the company are equally crucial when it comes to closing such deals. Whether these aspects have been analyzed with minute attention, are often responsible for a deal’s success or failure. Specialized professional services for impeccable handling of such soft aspects are grouped under the umbrella of Transaction Advisory Services. Experts offering these services, help their clients identify transactional risks, so that strategic decision making becomes easy for them. TAS services are not just limited to identifying risks for informed decision making, but also extends to actual deal closure and beyond. Let us explore some of the most common services offered under Transaction Advisory Services.
Different Services In Transaction Advisory:
- Merger and Acquisition Advisory services: A Transaction Advisory Service company provides solutions on both Buy and sell-side of a Merger or Acquisition that encompasses all activities, right from deal planning to deal closure. The responsibilities include chalking out an appropriate acquisition strategy, structuring local and international tax issues, identifying potential parties and synergies, assisting in financial models, negotiating a fair value, and measuring possible risks. In the case of a sell-side transaction, an advisor must have a thorough understanding of the implications. The business potential and its unique features need to be projected fittingly to its potential probable buyers. Experts offering service in this branch recognize the importance of positioning the business appropriately to be able to maximize chances for closure of the deal.
- Joint Venture Advisory services: TAS experts also offer their services in identifying a suitable Joint Venture partner, structuring the transaction, negotiating the venture, drafting the agreement, obtaining regulatory approvals, and taking the deal to a successful closure.
- Diligence Services: Business growth implies change and to bring in change, one must be prepared to undertake risk. And, to be able to thrive with risks, one needs to be armed with accurate insights and intelligence. Due diligence process executed by Transaction Advisory Service experts empowers the partners and lenders with a comprehensive summary of the financial, reputational, and organizational risks involved. Before signing a contract, a thorough investigation of these aspects are conducted. A company can hence ensure the authenticity and accuracy of the financial statements, processes, cybersecurity, merger integration, operational issues etc., and thereby minimize the risk of becoming a victim of fraud.
- Valuation services: In this segment, advisors adopt a set of procedures to estimate the financial worth of a potential business idea and identifying the maximum price the participants are willing to pay or receive to affect the sale of a business. A TAS expert also need to ensure that the valuation complies with all the necessary regulatory requirements. Valuation services are also availed in case of valuation of intangibles such as brand value assessment, trademarks, patents, goodwill copyrights, etc.
- Transaction Structuring Services: Owing to the complexity of taxation and other regulations, expert services are sought to help design and execute an appropriate transaction structure with due consideration to its implications. Unfortunately, there isn’t a standard template for transaction structure, since each deal has its own unique characteristics. Every prospective deal needs an impeccable understanding of the expectations before an optimal transaction structure can be prescribed by a Transaction Advisory Service provider.
- Debt Restructuring services: This is normally the final step before deal closure. This professional service of a Transaction Advisory Service expert aims at analyzing the debts of the two entities embarking on an amalgamation. Apart from the two parties directly engaged in a deal, Debt restructuring services also penetrate the banks and financial institutions involved, assisting them with their recovery/ rehabilitation process.
Benefits of Transaction Advisory Services:
- Relying on a Transaction Advisory Service provider relieves you from the stress of handling tedious and time intensive transactions.
- Thorough risk analysis empowers key players to arrive at well-studied decisions which are backed by data and trends that constantly change the market.
- For probable risky situations, risk mitigation measures are prepared and planned well in advance.
- Through the advice of Transaction Advisory Services experts, you can be sure that you are paying the right price for a deal in case of buy-side scenario. A seller on the other hand can optimally position the company to reap maximum value.
- All stages are covered, right from transaction planning, risk evaluation, execution of the transaction and even post-transaction support.