What is the role of the merger commissioner?
The merger commissioner reviews the methods used to determine the relative values of the participating companies. He assesses their appropriateness and determines whether the exchange ratio is fair.
It may request any relevant documents from the companies and conduct the necessary reviews to understand the assumptions, methods, and any specific challenges.
Report on the Exchange Ratio and Report on Contributions
When the transaction involves contributions in kind or special benefits, an assessment of the contributions may also be required. It is therefore important to distinguish between the conclusions regarding the compensation of the partners and those concerning the value of the net assets contributed.
What are the main points analyzed?
- scope and legal terms of the transaction;
- methods for valuing companies;
- financial assumptions and projected data;
- consistency of reference frameworks and time periods;
- sensitivity of the values to the key assumptions;
- proposed exchange ratio;
- contributed net assets and capital increases, when they are subject to audit.
Documents to Prepare
Merger proposal, articles of incorporation, organizational charts, resolutions, and timeline.
Financial statements, recent financial reports, budgets, business plans, and performance analyses.
Reports, models, methods, assumptions, comparables, and sensitivity analyses.
Reconciliations, Subsequent Events, Off-Balance-Sheet Commitments, and Extraordinary Items.
FAQ
Does the merger commissioner set the exchange ratio?
No. The exchange ratio is proposed by the companies’ governing bodies. The auditor assesses whether it is fair.
Can there be a single commissioner for all companies?
Under certain circumstances, the relevant provisions allow for the appointment of a joint commissioner in accordance with the procedure applicable to the transaction.
How much time should I set aside?
A merger generally requires more advance planning than a simple contribution, particularly due to the financial documentation, valuations, and legal timeline.