Mergers and acquisitions (M&A) are multi-phased business transactions, and while the entire process should be evaluated holistically, each stage in the M&A process comes with its specific activities and considerations. While the exact process will vary based on the size and complexity of the deal, the three major phases of mergers and acquisitions are generally as follows:
Preliminary Phase (Pre-Transaction)
When preparing for a merger and acquisition, the earliest activities involve planning and research. This includes first identifying potential partners that align with your company’s goals and then undergoing comprehensive due diligence once a partner has been identified.
If your company chooses to pursue a merger or acquisition, you will sign a letter of intent (LOI). Signing an LOI is a significant turning point in any merger or acquisition process. Not only does it outline the terms of the deal including the price, which assets and liabilities are included in the deal, the terms for buyer exclusivity, and any other conditions to close, but it also kicks off due diligence in earnest.
Due diligence is the process of conducting an extensive investigation into the business being acquired or sold. The goal of due diligence is to identify any potential risks or liabilities associated with the business, as well as evaluate the business’s financial performance, operations, legal compliance and other key factors that could impact the transaction. For more about key considerations to keep in mind during due diligence, be sure to read this post.
Transaction Phase
After the LOI is signed and due diligence has been completed, the parties move towards drafting and negotiating the definitive agreement. While completing a business purchase and sale agreement is one big process of ongoing negotiations, the final phase of negotiations addresses the definitive M&A agreement.
This legally binding agreement outlines the detailed terms and conditions of the transaction, including the purchase price, payment terms, representations and warranties, closing conditions, and more. Depending on the nature and size of the transaction, regulatory approvals may also be required. This can include antitrust approvals, industry-specific regulations and approval from shareholders or boards of directors.
Once all conditions outlined in the definitive agreement are met, including any required regulatory approval, the transaction moves to the closing stage. This is when the deal is finalized, and ownership of the target company is transferred to the acquiring company.
Integration Phase
Lastly, even though the business deal is done, the final phase of an M&A is to shift focus to integrating operations, systems, cultures and employees. Crafting a well-planned integration strategy is crucial to the success of an M&A and for realizing its full benefits.
Contact our Team at Sirulnik Law
Mergers and acquisitions in Florida are complex transactions with detailed documentation, paperwork and negotiation. Our team at the Law Offices of Alex D. Sirulnik, P.A. has managed and negotiated a broad range of transactions, from relatively small private transactions to complex companies involving multi-state-based assets. We provide services from the early pre-due diligence stage through to transaction closing.
If your company seeks to purchase or sell a business, let the Law Offices of Alex D. Sirulnik, P.A., help you navigate the process. Contact us to request a free consultation.