Mergers and Acquisitions (M and A) are terms almost always used together in the business world to describe two or more business entities joining to form one enterprise. The M and A process serves the business owner seeking a liquidity event and the business owner seeking to acquire and manage greater market share.
The merger and acquisition process is a complicated and detailed process that has been known to cause fatigue and stress for all parties involved. Additionally, the process can often take six months to a year to complete, or longer. Understanding how the process works and the steps involved will better prepare all parties toward a mutually successful union.
Historically merger and acquisition activities have been around since the late 1890’s. While the intention and purpose of mergers and acquisitions have remained the same, now M and A activities are supported by current technologies. These technologies include secured virtual meeting rooms, secured scans and secured faxes. These rooms augment the place of face to face meetings, particularly during the final stages of the M and A process.
The globalization of formerly distinct economies, regionalism, and international agreements such as the North American Free Trade Agreement (NAFTA) significantly contribute to the rise in M and A activities. As the primary purpose of any firm is to be profitable and grow, merger and acquistion consultants facilitate that growth.
The successful M and A firm is involved in many activities that include: intermediaries, survey takers, auditors, human resource specialists, accountants, to name just a few. As intermediaries M and A consultants bring together individuals and companies seeking a new market reach with like minded companies able to provide advantages such as economies of scale, new technologies, and greater organizational resources and visibility. This synergy is often unfulfilled until a proper merger and acquisition is accomplished.
When the decision is made that companies will participate in mergers, acquisitions, or other strategic alliances each participating entity must ensure that all transactions fit within the strategic goals and timelines of their company‘s corporate plans. The core business strategy must be evaluated during each step of the merger and acquisition process. There is the hidden danger that the anticipated corporate hybrid will fail to perform as expected.
Strategies among M and A consultants include reverse mergers, commonly referred to as reverse takeovers ( RTO’s). Reverse mergers allow private companies to go public and are often associated with companies that have no current operating history, assets, liabilities, and SEC qualified audited financials.
The shareholders of both companies must exchange their original stock for new stock in the surviving company. In the merger shareholders are not bought out. The merger itself is viewed as a stock transaction for federal tax purposes.
The positive side to mergers and acquisitions is:
* An exit strategy for the founders of the acquired company to benefit financially.
* Greater transparency for the new entity facilitated by SEC disclosure requirements.
* A public status that can also provide favorable terms for alternative financing. In general, public companies have a higher valuation than private enterprises.
The negative side to mergers and acquisitions is:
* Negative public reaction if a hostile takeover is perceived and there is resistance to financing from the investment banks involved.
* Two distinct cultures evolving that impede synergistic alliances. The inability of company leaders to successfully achieve commonality in systems and processes.
* Executives who are hesitant to make tough choices until they are certain where they are ingrained in the pecking order.
During the M and A process investment bankers use a due diligence checklist to cover all company related issues of interest to a potential buyer. The activities of the bankers include the drafting of a Confidential Information Memorandum (CIM). This is the primary sales document used to market the company to potential buyers.
The CIM contains information on how the business operates, biographies of key managers and other selected personnel, information on historical trends within the company, charts, graphs and other related information of value to potential partners.
This information is used to confidentially shop the company among potential buyers. The M and A will only be known by a few key people until the deal is finalized and then a public announcement will be made. Prior to the public announcement the merger and acquisition will be announced to company employees.
After the deal is closed and formalized, the participating management teams, investment bankers and lawyers meet for a closing dinner to celebrate the completion of the transaction. There is a lot of money involved in turning a business into a publicly traded company. There are many ways to do it wrong and only a few ways to do it right.
For all parties involved, you want a mergers and acquistitions company that has experience in:
* Mergers and Acquisitions.
* Go public services.
* Raising capital for expansion, and
* Fully experienced in all aspects of public corporations.
BEWARE of consultants, attorneys, and others who are not current and plugged into what is currently happening in the worlds of the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC).
The merger and acquisition process is a complicated and detailed process that has been known to cause fatigue and stress for all parties involved. Additionally, the process can often take six months to a year to complete, or longer. Understanding how the process works and the steps involved will better prepare all parties toward a mutually successful union.
Historically merger and acquisition activities have been around since the late 1890’s. While the intention and purpose of mergers and acquisitions have remained the same, now M and A activities are supported by current technologies. These technologies include secured virtual meeting rooms, secured scans and secured faxes. These rooms augment the place of face to face meetings, particularly during the final stages of the M and A process.
The globalization of formerly distinct economies, regionalism, and international agreements such as the North American Free Trade Agreement (NAFTA) significantly contribute to the rise in M and A activities. As the primary purpose of any firm is to be profitable and grow, merger and acquistion consultants facilitate that growth.
The successful M and A firm is involved in many activities that include: intermediaries, survey takers, auditors, human resource specialists, accountants, to name just a few. As intermediaries M and A consultants bring together individuals and companies seeking a new market reach with like minded companies able to provide advantages such as economies of scale, new technologies, and greater organizational resources and visibility. This synergy is often unfulfilled until a proper merger and acquisition is accomplished.
When the decision is made that companies will participate in mergers, acquisitions, or other strategic alliances each participating entity must ensure that all transactions fit within the strategic goals and timelines of their company‘s corporate plans. The core business strategy must be evaluated during each step of the merger and acquisition process. There is the hidden danger that the anticipated corporate hybrid will fail to perform as expected.
Strategies among M and A consultants include reverse mergers, commonly referred to as reverse takeovers ( RTO’s). Reverse mergers allow private companies to go public and are often associated with companies that have no current operating history, assets, liabilities, and SEC qualified audited financials.
The shareholders of both companies must exchange their original stock for new stock in the surviving company. In the merger shareholders are not bought out. The merger itself is viewed as a stock transaction for federal tax purposes.
The positive side to mergers and acquisitions is:
* An exit strategy for the founders of the acquired company to benefit financially.
* Greater transparency for the new entity facilitated by SEC disclosure requirements.
* A public status that can also provide favorable terms for alternative financing. In general, public companies have a higher valuation than private enterprises.
The negative side to mergers and acquisitions is:
* Negative public reaction if a hostile takeover is perceived and there is resistance to financing from the investment banks involved.
* Two distinct cultures evolving that impede synergistic alliances. The inability of company leaders to successfully achieve commonality in systems and processes.
* Executives who are hesitant to make tough choices until they are certain where they are ingrained in the pecking order.
During the M and A process investment bankers use a due diligence checklist to cover all company related issues of interest to a potential buyer. The activities of the bankers include the drafting of a Confidential Information Memorandum (CIM). This is the primary sales document used to market the company to potential buyers.
The CIM contains information on how the business operates, biographies of key managers and other selected personnel, information on historical trends within the company, charts, graphs and other related information of value to potential partners.
This information is used to confidentially shop the company among potential buyers. The M and A will only be known by a few key people until the deal is finalized and then a public announcement will be made. Prior to the public announcement the merger and acquisition will be announced to company employees.
After the deal is closed and formalized, the participating management teams, investment bankers and lawyers meet for a closing dinner to celebrate the completion of the transaction. There is a lot of money involved in turning a business into a publicly traded company. There are many ways to do it wrong and only a few ways to do it right.
For all parties involved, you want a mergers and acquistitions company that has experience in:
* Mergers and Acquisitions.
* Go public services.
* Raising capital for expansion, and
* Fully experienced in all aspects of public corporations.
BEWARE of consultants, attorneys, and others who are not current and plugged into what is currently happening in the worlds of the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC).
