Share insights | Promote your business & services | It's free of charge
The purpose of this section is to introduce reader to the main stages in the Mergers and Acquisitions (M&A) process from beginning to end. As a rule, an M&A transaction is complicated process, which may take months, or even years to finalize. The end of the M&A process certainly continues after the final signing of agreements since acquired or merged companies should be properly integrated.
Both seller and buyer should prepare before selling or buying a business. The Seller must make his/her company look as attractive as possible to the Buyer; while the Buyer must do some work to determine the proper selection criteria for the company. Presale preparations include such main items as:
Buyers should give some thought to such key aspects of an M&A transaction such as:
Both the Seller and the Buyer should form an M&A team of professionals who will lead the M&A process. The M&A team should include:
In summary, buyers and sellers will benefit from preparing for an M&A transaction which will lead to a smooth M&A process.
Finding the potential target from the thousands of candidates is a time-consuming process. In order to make this process more efficient the proper selection criteria should be defined. The list of possible items to consider for the initial filtering criteria:
The main purpose of this stage in an M&A process is to narrow down the list of possible targets to a short list of the potential candidates for an acquisition.
Due diligence is sometimes the most time-consuming and expensive stage. The purpose of due diligence is to help the buyer understand the seller’s company. Section, “Merger Due Diligence,” takes a detailed look at the due diligence process. The due diligence investigation should include such items:
Due diligence is a complicated and critical part of the M&A process. At this stage, the buyer determines whether the target company is worth pursuing and provides the foundation upon which a final purchase price is based.
Buyers should prove to sellers their ability to fund the purchase so that both sides are not wasting time. Sellers should consider postponing the due diligence stage until the buyer shows its creditworthiness. Section “Deal Financing” presents various acquisition purchase financing options.
After the due diligence stage is completed, the involved parties begin negotiating the specific terms and conditions of the M&A deal. The most important thing at this stage is to sign a legally binding agreement that makes business sense. Legal aspects of M&A transactions should be handled by the lawyers experienced in M&A negotiations and who sign such agreements on a regular basis.
The most interesting stage in the merger and acquisition process begins after the purchase agreement is signed. It is called Integration. Different personalities, corporate cultures, operations and technologies must merge in order to avoid future performance problems. Section “Merger Integration” looks at integration issues, which should not be underestimated.