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Your Merger and Acquisition Guide: The Steps in an M&A Transaction

Merger and Acquisition
   

Did you know that the typical merger and acquisition transaction may take several years to process? Even the fastest M&A transactions may take up to six months.

M&As are complex business processes that involve many steps and many critical business decisions. It is not a process to be rushed. Fraught with challenges, the consolidation of industries presents many important areas for consideration — from the tax issues to the resolution of partnerships. Business owners will also need to address the changes in their organization’s cultures when two very different firms come together to form a new one.

If you’re interested in learning more about mergers and acquisitions, read on for a breakdown of the complex process.

Merger and acquisition process breakdown

The typical M&A deal will go through ten stages. Let’s examine each.

  1. Acquisition Strategy

A sound acquisition strategy defines a company’s purposes for acquiring one or more target companies. These purposes may include expansion to a new market, global strategies, new product lines, and more.

  1. Key Search Criteria

The acquiring company will use these criteria to identify potential companies for acquisition. The more specific the criteria, the more refined the list of potential acquisitions will be.

  1. Searching the Market

With the search criteria, the acquirer shortlists all potential companies for acquisition. This process may take several months to complete as data is not always readily available.

  1. Acquisition Planning

In this stage, the acquirer initiates contact with the potential companies for acquisition. The aim here is to see how open the companies would be to an M&A deal.

  1. M&A Evaluation and Analysis

The acquirer will ask each company that is open to an M&A deal to provide them with financial information and business data. These will be used to evaluate the viability of the M&A transaction for both companies.

  1. Negotiation Stage

If an M&A transaction is deemed viable, the acquirer will develop and present an offer to the company to be acquired. This stage may take years to complete as companies negotiate the finer details of the deal.

  1. Due Diligence

During negotiations and even after the deal has been accepted, both companies will conduct due diligence. This lengthy examination process confirms all assessments and makes appropriate corrections to the M&A agreement.

  1. Final Sale Contract

With negotiations and due diligence complete, the acquirer will proceed to execute the final sale contract. This can be either a whole asset purchase or a share purchase.

  1. Acquisition Integration

After the deal is complete, both parties will have to work together to merge the two companies. This integration must be gradual to ensure minimal disruption to both companies.

  1. Post-Acquisition and Strategy

As the M&A takes place, the new entity must define a post-acquisition strategy. This includes new financing options and an updated business strategy that includes all new assets from the M&A transaction.

MGA has exceptional resources to help you prepare

If you’re worried about a merger and acquisition deal, we are here to help. We offer top-tier advisory and consulting services to help you walk through the process with confidence.

Advisory & Consulting Services

If you’re planning to sell your business, we encourage you to check out our blog here where we share the most critical steps to getting your business ready to sell. Just like selling your house, preparations need to be made.

Let us help you prepare your company for a merger and acquisition deal today! We are ready when you are.

March 22, 2019