M&A in light of the going concern principle: Strategy and transparency for securing the continuation of the business

published on 1 October 2025 | reading time approx. 3 minutes

Companies today are facing profound changes: technological change, geopolitical tensions, and dynamic markets demand a high degree of adaptability. In this environment in particular, ensuring the continuity of the business (going concern) is becoming increasingly important—undesirable developments can quickly have consequences that threaten the very existence of a company. Strategic M&A offers an effective tool for aligning business models for the future and addressing risks at an early stage.

M&A as a strategic tool

M&A is an effective means of responding to economic changes at an early stage and minimizing continuation risks. Through targeted acquisitions, companies can expand into higher-margin or innovative markets, thereby improving their earnings power and competitive position. At the same time, divestitures of less profitable areas enable companies to focus on their core business and use resources more efficiently.

Such strategic portfolio adjustments can not only support the improvement of earnings and risk profiles, but also have a potentially positive effect on the capital structure and liquidity situation. An improved financing situation increases operational flexibility, making it easier to implement necessary investments or restructuring measures. M&A can thus strengthen the financial stability and resilience of the company in the face of economic uncertainties and at the same time help to ensure the sustainable continuation of the business in terms of liquidity and the viability of the business model.

In cases where the first signs of a threat to the company's going concern are already apparent, M&A can also play a decisive role. This refers to both acquisitions that open up fresh capital and new business opportunities, as well as (partial) sales that can secure liquidity. Targeted M&A activities can thus be part of a broader catalog of measures in the event of a crisis and can be combined with further restructuring measures. Here, the focus of the financial analysis expands to include detailed liquidity and restructuring scenarios that assess realistic prospects for continuation. For investors and other stakeholders, this is essential as a basis for further steps and decisions. The interlinking of M&A strategy and going concern forecasts thus becomes a key success factor.

Recommendations for action for companies

Companies should view their M&A activities as a tool for actively securing the continuation of their business and should bear the following in mind:

Integrate M&A activities into strategic corporate management at an early stage and do not view them solely as a crisis tool.
Conduct regular portfolio reviews to strengthen business models in the long term and minimize risks.
Use acquisitions and divestments in a targeted manner to optimize profitability and liquidity.
Perform careful financial due diligence to thoroughly assess the financial risks and opportunities of transactions.
Create robust business cases that support strategic decisions and assist in the management of M&A processes.
If there are signs of going concern risks, involve investors, advisors, and financing partners at an early stage to develop suitable restructuring and financing solutions.
Supplement financial and operational analyses with liquidity and restructuring scenarios to create realistic going concern prospects.
Actively manage capital structure and liquidity to increase financial flexibility and stability.

Conclusion

The going concern principle highlights the close link between corporate governance and financial stability. M&A activities can serve not only as a tool for overcoming crises, but above all as a proactive means of further developing and securing the continued existence of a company. Careful financial due diligence ensures that M&A decisions are based on sound foundations. Companies that combine strategic portfolio adjustments with thorough due diligence create the conditions for actively shaping the going concern and securing their long-term competitiveness.