M&A: A Practical Guide to Doing the Deal, 2nd Edition

CHAPTER 5 The Buyer Must Have a Methodical Plan in Order to Find a Quality Transaction

In previous chapters, we discussed the M&A environment, as well as the motivations and tactics behind deals. Now it’s time to examine the M&A process. Chapter 5 begins with the buyer planning to hunt for an acquisition. To avoid wasting time and money, a would-be acquirer develops a methodical plan for expanding through M&A.

If the merger and acquisition business were like the images portrayed in movies such as Wall Street, every M&A deal would be finished in two weeks. The buyer’s executives would read only a few pieces of paper before making a decision, and the negotiations would take place in richly appointed, oak-paneled conference rooms studded with well-coifed, expensively tailored advisers. The discussions would involve hundreds of millions of dollars, and toward the end of the process the requisite legal documents would be drawn up in a jiffy, just waiting for the signatures of buyer and seller. This glamorous ideal, unfortunately, is far from the truth. The Hollywood portrayal represents only a few snapshots of the efforts needed to engineer a successful transaction.

To synthesize an entire deal on film would bore most viewers and discourage even the most intrepid corporate strategist from entering the arena. The extended search process, the analytical study of the targets, the frustrating negotiations with hardheaded sellers, and the complex legal documents are all fraught with ...