A merger or acquisition is usually a fairly involved process, and it can take anywhere from six months to several years to complete. In virtually all cases, however, it will be necessary to adhere to a process similar to the following 10-step process in order to complete the acquisition.
The 10-Step Process
A very typical 10-step process for completing a merger or acquisition includes some or all of the following steps:
- Develop a Strategy – It will be necessary for the acquisition company to have a clear idea of what is expected from the acquisition
- Establish Acquisition Search Criteria – Develop a process for narrowing down the candidates for potential acquisition
- Search for Possible Targets – Using the search criteria already developed, conduct an actual search for candidates for acquisition
- Plan for the Acquisition – Contact one or more candidates meeting your search criteria, which seem to offer good value. During conversations in this planning phase, you should get more information about the company, including their willingness to be acquired
- Conduct Valuation Analysis – After you have conducted initial conversations with candidate companies, you should be asking the target company to provide current financial information that will help you to further evaluate their suitability, both as a standalone business and as part of your company
- Negotiate – Now that you have all the information necessary in hand, you can work up a reasonable offer to the target company, and that can be used as a starting point to negotiate some of the fine points
- Due Diligence – This is always a comprehensive process which begins when the target company has accepted your offer, and it includes a detailed examination and analysis of all operations carried out by the target company
- Purchase Contracts – If due diligence is completed without incident, the next step would be to prepare a final contract for the purchase
- Financing Plan – The plan which was originally developed for making the acquisition will now be put into place, so the transaction can be completed
- Closing – The deal for the acquisition is closed, and management teams of the two companies involved get together, so as to iron out all the details of their merger.
Thinking of a business acquisition?
If you’re considering a business acquisition, we may be able to provide financial assistance. Contact us at Rotay Capital Finance, so our experts can explore some options for funding with you.