A “merger” means that two business entities voluntarily agree to join forces and combine their operations to create a new legal entity and a single business entity, while an “acquisition” means a company buying another company, taking over its operations and presenting itself as the new owner.
The purpose of mergers and acquisition is to achieve distinctive added value for both deal parties. For example, company X has a strong asset base, but faces challenges in marketing and management aspects while company Y has a strong management and marketing capabilities, but has no assets enabling it to expand its business. Through merger or acquisition, by adding strength factors and eliminating weakness factors between both entities to form a new entity, a considerably higher capability and revival will be achieved in terms of stability and growth for both entities.
It is worth mentioning that companies under the supervision of the Capital Markets Authority in Kuwait should comply with the Executive Bylaws of Law No. (7) of 2010 where Module Nine – Mergers and Acquisitions – highlight guidelines that should be taken into consideration when undergoing a merger or an acquisition process.
Module Nine – Mergers and Acquisitions highlights the following:
|Appendix 1||Procedures for executing a Merger Transaction|
|Article 3-3 and Appendix 2||Procedures for executing Voluntary Acquisition in addition to preparing the offer document|
|Article 3-3 and Appendix 3||Procedures for executing Non-Cash Voluntary Acquisition in addition to preparing the offer document|
|Article 3-3 and Appendix 4||Procedures for executing Competitive Acquisition in addition to preparing the offer document|
|Article 3-3 and Appendix 5||Procedures for executing Mandatory Acquisition in addition to preparing the offer document|
|Appendix 8||Procedures for executing Reserve Acquisition in addition to preparing the offer document|
Added value to business entities from Mergers & Acquisitions Services
- Attain competitive advantages that exceed the current situation.
- Provide expansion opportunities, which offer growth opportunities exceeding the traditional growth limits.
Services provided by Baker Tilly
The below services can be provided individually or as a package:
- Conducting Purchase Price Allocation Exercise
Assisting in acquisition services such as Purchase Price Allocation exercises for recognizing the impact of the investment in the books of the buyer or buyer in line with International Financial Reporting Standards (IFRS).
- Facilitating Buy-Side/Sell-Side Transaction Advisory Services
- Responding to sales offers, formulating bids, negotiating deals and ensuring transaction closure.
- Assisting the seller in submitting offers, evaluating bids and successfully closing the transaction.
- Conducting Business Valuation
Conducting business valuation of the target company and preparing a business valuation report, either to buyer or to seller.
- Performing Due-diligence
Conducting a thorough due-diligence of the target company and providing a due diligence report on behalf of the buyer.
- Formulating Tax Implication Reports
Tabulating and reporting on post-acquisition tax implications, if any, on the financial statements of the company.
- Facilitating negotiations based on an independent framework to attain interests for all parties to finalize the deals
Baker Tilly is a listed “Investment Advisor” at the Capital Markets Authority.