10-Step M&A Process

If you work in either investment banking or corporate development you’ll need to develop an M&A deal process to follow.  Investment bankers advise their clients (the CEO, CFO, and corporate development professionals) on various M&A steps in this process.

A typical 10-step M&A deal process includes:

  1. Develop an acquisition strategy – Develop a solid strategy outlining why the business should make acquisitions, and what the desired outcomes are
  2. Set the M&A criteria – Set specific criteria such as company value, industry, country, revenue, margins, growth, employees, etc.
  3. Search for acquisition targets – Use the above criteria to filter opportunities, which can arise from in-bound interest, searching on Capital IQ or Bloomberg, or using bankers
  4. Begin acquisition planning – This step involves reaching out to selected companies that meet the criteria and commencing a dialogue with management
  5. Perform valuation analysis – Once preliminary discussions have taken place a target company will likely provide detailed financial information which can be used to value the company in more detail
  6. Negotiation – After a view on valuation has been established an offer can be made and negotiations will go back and forth
  7. M&A due diligence – Once an offer has been accepted it will be subject to due diligence, a process of confirming that all information about the target is accurate
  8. Purchase and sale contracts – Upon successful completion of due diligence the final purchase and sale agreement can be signed (share purchase or asset purchase)
  9. Financing strategy for the acquisition – This step may occur earlier, but the final strokes of financing will come into place after the deal has been signed but before it closes
  10. Closing and integration of the acquisition – Finally, the official transaction closes (tombstones are handed out) and the long process of integration begins