A self-contained course on how deals actually work — written so someone with zero finance background can follow along, and detailed enough that someone in the room can sharpen up. From "what is M&A" to reading a live deal like an analyst.
Mergers and acquisitions — almost always shortened to M&A — is the business of one company buying, combining with, or absorbing another. A merger is when two companies agree to join and move forward as one. An acquisition is when one company (the buyer or acquirer) purchases another (the target) outright. In practice the words blur together, and most "mergers" you read about are really one company buying the other.
The core question behind every deal is simple: is the combined company worth more than the two companies apart? When the answer is yes, there's a reason to do the deal. That extra value has a name — synergy — and it's the story every acquirer tells to justify the price.
Deals happen for a handful of recurring reasons. A buyer might want to grow faster than it could on its own — buying a competitor adds revenue overnight. It might want a new capability: a technology, a product, a team, or a patent it would take years to build. It might be chasing scale — bigger companies can cut costs by combining overlapping departments. Or it might be defensive: buying a rising threat before it becomes dangerous, or before a rival buys it first.
Every deal is a bet that two things together are worth more than the sum of their parts.
Sellers have their own reasons. Founders may want an exit — a way to turn years of work into cash. A company under pressure might sell because it can't compete alone. Sometimes the best outcome for shareholders is simply to be bought at a premium.
When a buyer acquires a public company, it almost always pays more than the current market price. That extra amount is the premium — the bonus needed to convince shareholders to sell. A 30–50% premium is typical. Too small, and shareholders say no. Too large, and the buyer risks overpaying, which is exactly the kind of risk MergerIQ is built to flag.
Understanding why a deal is happening is the first step to judging whether it will work. A deal driven by a clear strategic logic and a sensible price tends to close. A deal driven by ego, fear, or a wildly high price tends to run into trouble — with boards, with shareholders, and with regulators. The rest of this course walks through exactly how that plays out.
Every sector trades in a different range. The same multiple that's normal for software would be wildly high for hardware. Use this as a gut-check — if a deal sits well past the "aggressive" column, ask why.
| Sector | Typical Price / Revenue | Typical Price / Profit | Considered aggressive |
|---|---|---|---|
| SaaS / Software | 10–20× | 25–40× | > 20× rev |
| Hardware | 1–3× | 8–14× | > 5× rev |
| Fintech | 6–12× | 18–30× | > 15× rev |
| Healthcare | 3–6× | 12–20× | > 8× rev |
| Pharma / Biotech | 4–8× | 14–22× | > 10× rev |
| Consumer | 1–3× | 8–12× | > 4× rev |
| Media / Telecom | 2–4× | 6–10× | > 6× rev |
| Defense / Aerospace | 2–4× | 10–16× | > 6× rev |
Not all deals look the same. The shape of a transaction tells you a lot about why it's happening and how regulators will react. A horizontal deal joins two direct competitors — same industry, same stage. A vertical deal joins a company with its supplier or distributor. A conglomerate deal combines unrelated businesses entirely…