Merger and Acquisition Process is a great concern for all the companies who intend to go for a merger or an acquisition. This is so because, the process of merger and acquisition can heavily affect the benefits derived out of the merger or acquisition. So, the Merger and Acquisition Process should be such that it would maximize the benefits of a merger or acquisition deal.The Merger and Acquisition Process can be divided into some steps. The stepwise implementation of any merger process ensures its profitability.Preliminary Assessment or Business Valuation
In this first step of Merger and Acquisition Process, the market value of the target company is assessed. In this process of assessment not only the current financial performance of the company is examined but also the estimated future market value is considered. The company which intends to acquire the target firm, engages itself in an thorough analysis of the target firm’s business history. The products of the firm, its’ capital requirement, organizational structure, brand value everything are reviewed strictly.
After complete analysis and review of the target firm’s market performance, in the second step, the proposal for merger or acquisition is given. Generally, this proposal is given through issuing an non-binding offer document.
When a company decides to buy out the target firm and the target firm agrees , then the latter involves in Exit Planning. The target firm plans the right time for exit. It consider all the alternatives like Full Sale, Partial Sale and others. The firm also does the tax planning and evaluates the options of reinvestment.
After finalizing the Exit Plan, the target firm involves in the marketing process and tries to achieve highest selling price. In this step, the target firm concentrates on structuring the business deal.
Origination of Purchase Agreement or Merger Agreement
In this step, the purchase agreement is made in case of an acquisition deal. In case of Merger also, the final agreement papers are generated in this stage.
Stage of Integration
In this final stage, the two firms are integrated through Merger or Acquisition. In this stage, it is ensured that the new joint company carries same rules and regulations through out the organization.
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