M&A is a very complex business process that involves an important change in corporate strategies. It can result in positive growth and a higher return on investment, or it can be disastrous if the plan is not properly thought out and implemented.
Purchasing another company allows you to expand your market presence by reaching new customers and increasing revenues. Acquiring the right company, however, is essential to success. Many times buying in haste results in a failure to integrate that is costly for both the acquirer as well as to the customers of the acquired company.
Many M&A deals involve a horizontal merger, which involves combining rivals from the same sector. Cross-sector convergence has also become popular in the retail industry, such as companies buying technology companies or e-commerce firms.
The first steps of the M&A procedure include creating an agenda, having high-level discussions to determine the way each company will work strategically, and making due diligence. Negotiating and concluding the deal is the next step. The acquiring company will pay cash or stock in accordance with the deal.
The sale of a business is completed when all closing conditions are completed and the parties sign a sales agreement. During the M&A process the antitrust authorities will examine the transaction to ensure it does not create a market monopoly. After the acquirer has completed the antitrust review it is able to end the acquisition and transfer the ownership of the target to the buyer.