8 Steps to Successful Merger & Acquisition (M&A)


The merger and acquisition process has many steps which may sometimes be delayed and end up taking a minimum of two months upwards to complete a successful M&A. In this blog, I simplify the process for you and to ensure that you benefit the most from the acquisition, explaining the acquisition process in brief from the beginning to the last step which is to now seal the deal by implementing the transaction. Here are the steps:

  1. Plan the acquisition strategy

  2. Determine the search criteria for the opportunity to be acquired

  3. Identify the merger and acquisition candidates

  4. Planning the transaction

  5. Analysis of the company

  6. Letter of intent (LOI) and Negotiation

  7. Due diligence

  8. Implement transactions and monitor ongoing performance


1. Plan the acquisition strategy

First, start by setting your goals. You should have a clear idea of the benefits that you'll acquire from the acquisition. Some advantages are:

  • Increased market share

  • Diversification of risk

  • Faster strategy implementation

  • Tax benefits

  • Access to talent

  • Synergies "One plus one equals three"

  • Economies of scale eg. increased access to capital

It is important to consider whether the acquirer is industrial or financial.


2. Determine the search criteria for the opportunity to be acquired

Here are some key points to consider about the potential companies:

  • Financial assistance: The company to be acquired needs financial assistance and acquiring the company can solve the problem in exchange for equity.

  • Want to eliminate competition

  • Geography where the company to be acquired covers areas the acquirer has n business

  • Want to improve management of the company to be acquired. Something the acquirer is offering

  • International expansion

3. Identify the merger and acquisition candidates

The third step of the acquisition process involves the identification of the potential merger and acquisition businesses that could meet the search criteria in identified markets/service lines.


4. Planning the transaction

At this point, the purchaser contacts the potential business to be acquired of which I can part with you to support your acquistion, acquiring as much information as possible about the prospective company. The information helps assess the potential transaction. The business usually enter into a confidentiality agreement by signing an NDA as normally more confidential information is shared in order to advance the discussions for the acquisition.


5. ENAGEMENT AND PLANNING

It is necessary to gather as much information as possible about the business to be acquired. Things like financial statements can be examined at this stage to help collect more information about the potential acquisition. This helps the acquirer evaluate further the potential acquisition.


6. Letter of intent and Negotiation

This is the first offer, which is normally non-binding but usually has the guidelines for the potential transaction. Once this offer is submitted, the companies will start the negotiations in a more detailed manner.


7. Due diligence

This begins once the LOI is accepted. The main objective of this is to correct the evaluation that the acquirer has made on the company to be acquired. Due diligence involves the review of the financial, legal, operational position, and labor aspects where they also check the status of the workers of the company to be acquired. It is through the report that possible contingencies that may arise after the acquisition are indicated. Also read: Due Diligence and Integration Best Practices


8. Implement transactions and monitor ongoing performance

Once the purchaser has agreed to continue with the acquisition, the last step is to present the first draft of the purchase agreement. There are 2-time lines at this point:

  1. The signing of the commercial operation via the merger, acquisition, purchase of assets, etc

  2. The businesses are now effectively integrated

A successful merger or acquisition is one where strategic value is maximised while disruptions or distractions to existing operations are minimised. Contact me and get started. Book an obligation-free 30-minute appointment with Scott Ker to explore your best options for sale, growth, or succession. Appointments can be made during or outside business hours, at your preferred location, and face to face, phone or online.

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