Mergers and acquisitions involve companies buying or merging with other companies. These transactions are complex and involve numerous specific steps. Below is a brief overview of certain key steps:
Develop an acquisition strategy. This means analyzing potential gains from an acquisition. For instance, expand a product line or reach new customers.
Set the M&A search criteria. Highlight the primary features of a target company, looking at products, services, geographic location and profit margins. Then search for and examine prospects.
Begin acquisition planning. Make a first contact with a target company and evaluate receptiveness.
Perform valuation analysis. The acquirer asks for more data such as financials and profit margins for evaluation.
Start negotiating. After producing some valuation models, the acquirer makes an initial offer, and negotiations begin.
Perform M&A due diligence. Confirm the initial assessment and value of the target by examining its business, financial and other operations, including human resources, assets, risk profile, and customer base.
Draft purchase and sale agreement. The parties negotiate the terms of the acquisition or merger agreement, and then execute a final agreement.
Integrate the companies. The deal closes, and management of both firms work together to integrate the merged companies (teams, assets, products, and other operations).
