A Brief Overview of the Merger & Acquisition Process

The merger and acquisition process is beneficial for both parties. It allows business owners to get some money out of a struggling business or one that they do not have the capacity to grow, while permitting larger business owners with expansion opportunities. Whether you are acquiring a new company or you’re part of a company that’s merging with another, knowing what to expect can make the process much simpler.

Find Candidates and Determine Areas of Growth

A company interested in expanding will begin by considering what they want from a potential acquisition and where they want to grow. From there, they’ll begin the process of considering smaller businesses that fit their criteria.

Acquisition Planning

After creating a list of potential targets, executives in the larger company can reach out to representatives of each company to figure out whether or not they are open to a possible merger. This should cull the list considerably and leave the company with one or a handful of options to pursue.

Valuation Analysis

As discussions proceed, the acquiring company has to get into the nuts and bolts of the merger—how much is the smaller company worth? For the sake of easier negotiations and a more targeted offer, the acquiring company may utilize multiple valuation models and use that information to come up with an initial offer.

Negotiations Between Parties

Negotiation can be the easiest or most difficult part of the mergers and acquisitions process, depending on how open both sides are to compromise. Using different valuations and other available data, both sides can make a case for their offer and hopefully come to an agreeable amount. From there, they can negotiate the finer points of the deal.

Due Diligence

Due diligence can take months, depending on the size of the company being purchased and how thorough the purchasing company is in their research. Due diligence is the purchaser’s chance to confirm original valuations, examine financial records, and analyze the target company’s business operations, business model, and potential growth.

Draw Up Contracts

If due diligence goes smoothly and doesn’t turn up any red flags for the acquiring company, both companies can move forward. Final decisions will be made regarding contracts, and both sides will have their legal counsel review the contracts.

Solidify Financing

The purchasing company should have financing options researched by this point, and when the deal is nearly complete, they should finalize financing and get the capital they need.

Finish the Merger

Once the contracts are signed and the deal is closed, the companies begin merging and creating new protocols.

An experienced business lawyer can help you come out ahead in a merger and acquisition deal. Reach out to the team at Trembly Law to plan for your company’s future.

Trembly Law

In the South Florida legal community, Brett sits on the Board of the South Miami Kendall Bar Association, the Florida Bar 11th Circuit Grievance Committee, volunteers on the Florida Bar Young Lawyers Division Mentoring Program, the Dade-County Bar Associations Rainmakers Committee, and annually volunteers for Miami-Dade County’s Ethical Governance Day.
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