The fast-growing market and the need to survive in competition have driven many firms to devise several growth strategies.
Firms upgrade existing systems, improvise workflows, adopt new technologies, and more, which are enough to achieve short-term growth goals. However, strategies such as Mergers and Acquisitions advisory help firms achieve long-term.
Big business strategies like Mergers and Acquisitions consulting give organizations the impetus for growth and place these business giants at the forefront of competition.
But how do firms bring about a merger or acquisition in the US?
Let’s take a look at the M&A process.
Technology Mergers and Acquisitions (M&A) Process and Steps:
1) The Acquisition Strategy
The first step in the M&A process is creating a good acquisition strategy. This requires the acquiring company to have a clear idea of what goals it wants to achieve from the acquisition—expanding product lines or access to new markets.
Here are some questions to ensure a successful acquisition strategy:
- What business is the company involved in?
- What is the scope of the business?
- What overall direction does our business intend to take toward its market?
These questions will bring your M&A strategy in line with the overall business strategy in the US.
2) M&A Search Criteria
The next step is to identify key criteria for target companies that align with the acquiring firm’s acquisition goals. The criteria could vary based on customer base, geographic location, and profit margins.
3) Target Screening
The acquiring firm then begins target screening by assessing the potential targets in line with the acquisition criteria
4) Acquisition Planning
The acquirer will then meet with the target companies and offer a good value for them or their assets. With the initial meeting, the acquiring firm will seek to gain information about the target and see how flexible is the target company with a merger.
5) Valuation Analysis
After the initial conversation, the acquiring firm will ask the target to provide substantial information, including current financials, operations, liabilities, etc. This helps the acquirer assess the target’s capabilities as a business and as a potential acquisition firm.
6) Negotiations
The initial offer will be made after gathering enough information to evaluate the target. Then, the two firms will negotiate terms in further detail.
7) Due Diligence
This process begins as soon as the buyout company has accepted the offer. This reevaluates the acquirer’s initial assessment of the target’s value by conducting a detailed analysis of the target’s operations, such as assets, customers, human resources, and more. Due diligence is a concrete step that leaves no room for future concerns or problems
8) Purchase and Sale Contracts
In this stage, a final sale contract is set up, and both companies decide on the type of purchase agreement—asset purchase or share purchase.
9) Financing Strategy for Acquisition
While the acquiring firm has already considered its financials in the early stages of the deal, the fine details are implemented only after the purchase and sale agreement has been signed.
10) Closing and Integration
The acquisition deal is closed, and representatives of both firms work together on the merger.
The Mergers and Acquisitions (M&A) Life Cycle
The M&A life cycle categorizes the different M&A process stages into three broad phases:
1) Strategy
Under this phase, M&A Advisors in the US assess changes in the acquirer’s industry and identify growth opportunities and targets that align with the firm’s corporate strategy.
This encompasses creating a portfolio strategy, assessing an operating model, corporate financing, investment banking, and strategic alternatives.
This stage also covers target screening, deal structuring, readiness review, synergy analysis, and modeling.
2) Execution
During the execution phase, M&A expert advisors in commercial, financial, HR, IT, operational, and tax aspects provide insight into the transition and financing options. The execution phase combines experience and knowledge to close the complex process.
This stage covers plan structuring, financial advisory, negotiation support, due diligence, preliminary price allocation, tax structuring, and more.
3) Integration
In the final phase, integration or separation will present the acquirer with challenges, including costs, timelines, and business disruptions. This phase spans integration or separation planning support, developing the sales purchase agreement, financial agreement advisory, finalizing valuation and purchase price, and completion statement advisory.
Post-deal closure, M&A advisors organize the Day 1 Readiness Transition Service Agreement, synergy support, human capital integration, tax integration, and restructuring. Technology M&A Advisors in the US assure a hassle-free process throughout the integration phase, including end-state planning.
If carried out in a phased and strategic manner, the M&A process benefits both the acquirer and target companies. Assessment, evaluation, and reevaluation are key to the process at every step, without which the merger or separation can be unfruitful for both firms.
Above all, solid advisory support can transform the daunting Mergers and Acquisitions Advisory process into an organized system. Are you considering a merger?
Are you looking for a reliable IT advisory service partner in the US? Contact Veritis!
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