CHAPTER THREE

Anatomy of a deal

This section examines the make-up of M&A transactions.

M&A STAGES

Whilst all M&A deals are unique and their shape may be altered by the realities of the manner in which the deal is conducted, we need a model around which the concepts of M&A can be demonstrated. The following model covers the full lifecycle of most M&A deals from initial conception to returning the firm to ‘Business As Usual’ (BAU).

As already discussed, businesses engaging in M&A activities follow a general cycle. In this section we will explore the activities that occur during the various stages of the lifecycle.

The key activities in each of these stages are presented in Figures 3.2 and 3.3.

FIGURE 3.2 High level M&A plan (1 of 2)

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FIGURE 3.3 High level M&A plan (2 of 2)

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An M&A deal progresses through a number of stages. These are:

  • Prelude – This is concerned with the identification of the merger or acquisition target. Defining the type of organisation to target, identifying firms that meet these criteria and selecting the organisation you want to acquire or merge with. Sometimes this is a very analytical process, at other times it is simply opportunistic; circumstances will dictate, as will the company’s own strategic preference.
  • Deal negotiation – Approaching the other company ...

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