M&A Process

M&A lies at the heart of Investment Banking. Everybody wants to land that internship or analyst role in M&A but what actually do they do? What are the late nights on powerpoint spent working on? What is the M&A process?

Strategy

Firms will initially identify their rationale for expansion. Common reasons include:

• Expansion into foreign markets

• Gaining access to different technologies and talent

• Boost earnings

Banks hired by the firm will begin to shortlist potential targets that fit their needs.

1) Outreach & Confidentiality

Once a target has been settled, the buyer makes initial target with the targets board to test the idea. Both parties will sign NDA's to protect sensitive information.

2) Indicative Offer

The buyer does analysis based off public information on the target company. Once this is completed they make an indicative offer. An initial offer which highlights a rough acquisition price, payment method and the key terms of the deal.

3) Negotiations & Final Offer

More detailed valuation techniques are carried out by the buyer, while final negotiations are carried out. The terms of the deal are also finalised.

4) Due Diligence

The buyer now does a full dissection of the target company. They'll look into the legal risks, HR and the company operations/structure. Transaction payment is also typically finalised here e.g. mainly debt or equity.

5) Agreement & Approval

Both parties will sign a Definitive Purchase Agreement DPA once all the terms are agreed and diligence is complete. Regulatory bodies may need to approve the deal and public companies can have a shareholders vote.

6) Deal Closing & Integration

The payment goes through and now integrating the two firms becomes the priority. It is arguably the hardest part of the entire process.

I hope this explanation was useful, for the rest of my work click here!