Mergers and acquisitions are among the most effective ways to expedite the implementation of a plan to grow rapidly. Companies in all industries have grown at lightning speed, in part because of an aggressive merger and acquisition strategy. The impact of technology and the Internet has only further increased the pace and size of deals.
An overview of Mergers and Acquisitions
The Merger comes from the word ‘merge’ which means combining two entities. Here, Merger means consolidating two companies to form as one, while Acquisition means one company taken over by other. Mergers and Acquisitions (M&A) are two entirely different terms so let us first understand them individually.
When both the terms are combined, they become one of the most valuable aspects of the corporate finance world. So the basic concept behind M&A is to make industry professionals aware of the fact that when two different companies combine, they create more value as compared to individual stand.
Steps involved in the Mergers and Acquisitions Process
Step1: Build a powerful acquisition strategy
Building a good acquisition strategy helps acquirer with a transparent goal and provides them a better insight on gaining more from the acquisition process. Also, it will help them to chalk out the growth plan through the target.
Step2: Create the Mergers and Acquisitions search criteria
This step is essential to identify potential target companies. The search criteria may include profit margins, geographic location, or customer base.
Step3: Acquisition planning
As an acquirer, you will make contact with several companies meeting your search criteria and will seem to offer good value to them. The prime objective of making contacts is to find out more information about the company and get to know how much acquiescent to Mergers and Acquisitions the target company is.
Step4: Conduct valuation analysis
When the target company is contented with the initial conversation, you will acquire their substantial information which will further help you to gauge the target, both as a business as an individual and as a suitable acquisition target.
Step5: Win the target through negotiations
Once you have selected the target company, your next step would be negotiations. Doing so, will bring the target company to a general agreement for a negotiated merger and will let both the companies provide their mutual consent on working for the long-term working of the Mergers and Acquisitions.
Step6: Mergers and Acquisitions due diligence
Due diligence is pivotal to confirm the acquirer's assessment of the value of the target company by performing a detailed analysis of every facet of the target company's operation.
Step7: Purchase and sale contracts
The next step is to execute the final contract for sale. Both the parties need to take a final decision on the type of Share purchase agreement, whether it's an asset purchase or share purchase.
Step8: Closing and integration
Eventually, the acquisition deal closes, and management teams of both the parties work together on the process of merging both the firms.if you have further inquiries on Mergers and Acquisitions, click here!
Source
