Deal Target Sources and Merger & Acquisition Processes
The Merger & Acquisition Process
The five steps of the merger and acquisition process is as follows:
- define the M&A strategy and goals
- develop and screen a potential target list
- make contact with attractive targets and conduct due diligence
- develop valuation, make offer via a term sheet or LOI, negotiate and close the deal via the definitive purchase and sale agreement
- execute post merger integration
The Joint Venture & Strategic Alliance Process
Overall, the joint venture (JV) process has a series of steps:
- Defining the business strategy.
- Determining whether a JV is the right vehicle. This requires comparing the JV option against acquisition, non-equity partnership, contractual alliance, or go-alone approaches. Generally JVs are most appropriate when 1) they are focused on combining complementary capabilities (e.g. products and market access), sharing risks, or 2) merging businesses where an outright M&A transaction isn’t possible or where the premium involved in an acquisition can’t be recovered via operating synergies and 3) when go-it-alone is too risky or too slow, and 4) simpler vehicles like contractual agreements aren’t sufficient.
- Developing the JV deal concept.
- Negotiating detailed terms and conditions.
- Planning and launching the JV.
- Evolving, or terminating, the JV.
Locating Merger, Acquisition, and Joint Venture Targets
You can begin to compile a list of companies with whom you are currently doing business — either those you sell to or those you buy from in your supply chain. Having an existing relationship and contacts facilitates identification of appropriate targets.
- Your customers may be purchasing products or services from other companies that are used in conjunction with yours, and thus be able to suggest appropriate targets.
- And if suppliers are providing products or services to other companies or industries, they may also be able to provide an introduction to key contacts at targets.
Next, you can consider your competitors. If you are selling to many of the same companies, a deal should provide many synergies and cost saving opportunities. However, joining forces with adversaries is difficult because it often leads to the removal of duplicate members of the management team.
To effectively complete the M&A deal, Joint Venture, or Strategic Alliance, please click below to get the various documents required:
|Term Sheet||Due Diligence||Company Valuation||Definitive Agreement|
|Post Merger Integration||Governance & Board||Approach Targets|