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Understanding the Mergers & Acquisitions Process
Organizations often seek to grow or expand their clientele or product base through mergers and acquisitions (M&A). Each M&A is unique and the way the transaction plays out depends on a number of factors, including the size of the deal, the number of employees involved, the relationship between the companies, and the applicable regulations. Still, most M&As follow a predictable process from identifying the target company to closing. An experienced Oakland Park, FL mergers and acquisitions attorney can represent you in your M&A deal.
What Are Phases of the Mergers & Acquisitions Process?
Develop the M&A Strategy
The first thing your organization needs to do is develop its strategy for the M&A by defining the objectives of the transaction and the parameters for success. This entails determining the purpose for acquiring or merging with another company, as well as what the organization wishes to gain from this transaction. This can range from the acquisition of proprietary technology to the addition of talented human resources.
Identify the Target
Next, you will search for and identify potential targets for an M&A which fit a predetermined strategy. If the goal is to grow the client base, you will identify companies with a strong clientele in the same business line. If the goal is to absorb new technology, the target company’s technology will be the key factor. Sometimes, identifying an ideal target comes before developing a sound strategy.
Perform Valuation Analysis
When you have identified the target company, the next step is conducting valuation analysis to determine whether the envisioned acquisition is financially in line with the company’s M&A strategy. Crucially, valuation analyses will give you a sense of the asking price for starting negotiations.
Negotiations
Once you have a sense of price, you will present an offer to the target company and begin negotiations. A detailed term sheet will form the basis for negotiations and include terms such as the projected price, any conditions, confidentiality provisions and more. Although non-binding, the term sheet is likely to form the basis for the final transaction.
Due Diligence
During the due diligence process, you will carefully review the legal and financial standing, human resources, compliance, tax burden, and other aspects of the target company. Due diligence is one of the most important parts of the transaction. If major issues come up, such as significant pending litigation or problems with patents — especially if much of the reason for the proposed acquisition is to purchase its technology — this may set back the deal or cause you to table it altogether.
Closing
Once you have obtained the financing necessary to finalize the transaction and negotiate the final terms of the purchase and sale agreement, the deal closing occurs, in which the parties sign the agreement and finalize the transfer of assets or shares to purchase the company.
Call an Oakland Park, FL Mergers & Acquisitions Attorney
When your business needs to navigate a merger or acquisition, you can turn to our experienced Fort Lauderdale, FL business law attorney. At The Elliot Legal Group, P.A., Attorney Gavin Elliot represents companies who wish to grow by undergoing an M&A, and we also counsel startups and more established companies who are targets for an M&A. Call us at 754-332-2101 for a consultation.
