The merger and acquisition process is one of the most essential things in a merger or acquisition deal that influences the benefits and profitability of the merger or acquisition. As the process greatly affects the benefits that come out of the merger or acquisition, it becomes a point of great concern for all companies who wish to go in for the process. The process can be divided into some steps. The stepwise implementation of any merger process ensures its profitability.
Preliminary Assessment or Valuation of the Business
The first and foremost step in the merger and acquisition process is to assess the market value of the target company. While making the assessment, the current financial performance of the company is examined as well as the estimated future market value is also considered. The company that aims to acquire the target firm ensures to get the complete details about the target firm’s business history. The products of the firm, its’ capital requirement, organizational structure, brand value everything are analyzed strictly.
Phase of Proposal
The proposal for merger or acquisition is given after doing the complete analysis and review of the market performance of the target firm. Mostly, this proposal is given through issuing a non-binding offer document.
When a company decides to buy out the target firm and the target firm agrees, then the target firm involves in exit planning. Seeing the right time for exit, they consider all the alternatives like Full Sale, Partial Sale and others. Moreover, the firm also does the tax planning and calculates the options available for reinvestment.
After deciding on the exit plan, the target firm pays full attention to the marketing process and tries to get the highest selling price. During this step, the target firm concentrates on structuring the business deal.
Stage of Integration
Finally, the two firms are integrated through a merger or acquisition. In this stage, it is assured that the newly joint company carries the same rules and regulations throughout the organization.