Mergers and acquisitions are viewed by many enterprises as a way to optimize production assets following the changing market situation, as a way to achieve competitive advantages. In this article, more about the acquisition process flow chart.
The essence of M&A transactions
Strengthening globalization processes and growing competition between companies is the trend of the latter. The struggle for competitive advantages, the integration of companies from different segments of the economy, the creation of international corporations is reflected in the processes of mergers and acquisitions of companies. It should be noted that recently, mergers and acquisitions have become one of the most used strategies for organizational restructuring of large market participants aimed at increasing investment attractiveness and increasing the value of companies.
Support for M&A transactions includes a full range of necessary services: analysis of the risks of the acquired asset (the so-called due diligence), development of an optimal mechanism for concluding a transaction, support of negotiations between the parties, preparation, and verification of all documents that will be required to conclude a transaction, control over the signing of an agreement, and evaluation of its results. Only by adhering to such a scheme, one can be sure that the takeover or merger will be successful, without complications and negative aspects, and that the main goal set by the initiators will be achieved.
What are the steps in the acquisition process?
The acquisition procedure assumes that, according to its results, one company becomes the owner and acquires control over another company. The acquisition can take place through the purchase of assets or shares of another company. Under such a scheme, the company, being taken over, retains its legal status and continues to conduct business as a subsidiary. At the same time, the acquired company can continue to exist as a subsidiary or become a structural unit with a complete loss of independence. In most cases, the absorbed companies lose independence, management changes in them, and management is transferred to general management.
M&A deal is a complex multi-stage process that takes a long time. So, there are some steps in an acquisition process, a detailed study of which will ensure the success of the business combination. It includes the following stages:
- Defining a strategy. When developing a strategy, it is important to clearly define the goals of the future merger, ie to get an answer to the question “why?” and “why?”, and compare the potential benefits and losses of this project.
- Determination of the final results of acquisitions. Having decided on the company’s strategy and, accordingly, on the strategy of mergers or acquisitions, the buying corporation sets for itself the main indicators that it wants to achieve in the course of M&A.
- Target company search. To analyze potential candidates, it is necessary to develop a special system of selection criteria, which is determined by the company’s development strategy. On the basis of this system, there will be further “screenings” from a large list of companies.
- Analysis of the acquired company. This phase in the acquisition process flow chart is characterized by a comprehensive assessment of the target firm. The process of evaluating includes determining its financial performance and technical characteristics.
- The implementation of the transaction. After agreement on the terms of the M&A of the company, the legal registration of this transaction is carried out.
- Integration of companies. The level of integration affects the scope and nature of the actions required, as well as the organizational aspects, timing, and budget.