M & A Viewpoint: Key Phases of the Dealmaking Process
A number of books have been recently written on M&A integration, success and related topics. Each offers an overview of the dealmaking process. Many of these books tend to "chunk" the process into 6 or 7 steps. While this may provide a mnemonic advantage for marketing purposes, we have identified 15 key phases that need to be diligently handled to make a successful deal:
- Formulation of strategy, goals and criteria.
- Staffing, assignment of duties, delegation/limitation of authority and allocation of necessary resources for the M&A "department."
- Development of deal opportunities (deal flow).
- Initial screening of presented opportunities.
- Detailed analysis and evaluation of the target company.
- Commencement of post-deal integration planning.
- Presentation of initial bid or offer (i.e., letter of intent).
- Negotiation of purchase price and deal terms.
- Formal due diligence review.
- Negotiation of contracts and documents needed to effectuate a closing.
- Placement of necessary funding.
- The closing with attendant payouts and consents.
- Implementation of post-deal integration plan.
- Post-deal review.
- Re-formulation of strategies, goals and criteria.
These phases can overlap and vary in duration. For example, the development of the post-deal integration plan should start once the decision is made to pursue a given company and continue beyond closing. In addition, some of these phases are interdependent upon each other. The results of the due diligence review will impact contract negotiations, funding strategy and the post-deal integration plan.
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