Mergers and acquisitions, also known as M&A transactions, have become increasingly common, not only in market-developed countries, but also number of M&A deals by year in developing and transition countries is on the raise. Whether this is called merging or taking over is a matter of semantics.
If the organizations are of approximate size and if an agreement between the managements is a desirable outcome for both, it is called a merger. Otherwise the download name is used. The goals of the companies conducting these transactions can be different, from strengthening the position in the existing market, entering new markets, access to new technologies, patents…
1. Getting acquainted with the process
Since this practice is closely related to the sale and acquisition of the company, everyone must know how the process is performed. This procedure has its own language, terms, customs and key steps that you must follow. However, once you understand the dynamics and process of acquisition, everything will be much easier. For example, it is necessary to understand which party wants to get more out of the contract. It is also important to know how many stakeholders there are and whether some are competing with each other.
Gather other important information related to key conditions, prices, job attractiveness, subsequent risks and other important issues, including mergers and acquisitions statistics you can find at https://imaa-institute.org/mergers-and-acquisitions-statistics/
2. Consideration of organizational climate
It is the biggest problem with the connection. If the famous “we do it that way” is in force. Then the combination of new and old mentality creates big problems. In young organizations, the style of the first people influences the overall climate in the organization; in the old climate influences the attitudes of the first people. . Buying and not paying enough attention to the organization can be fatal. Changing the climate in aging organizations is not easy.
The introduction of technological discipline and the reduction of the workforce are yielding results for now. The organization must be reorganized. Results will be achieved only by creating responsible new parts of the new (now created) organization, which means that the emphasis should be either on flexibility or controllability, depending on the life cycle of the plant, whether it grows or ages.
3. Confidentiality agreement
During this process, there are cases where you will want to share confidential information with the other party. However, it is necessary to keep this information safe at all times so that the other party does not misuse it. If you reveal some important information to them, they are obliged not to use it to your detriment but to respect it. One way to protect information is to use non-disclosure agreements. However, this agreement does not always make sense. So, a contract makes sense if you want to share an idea or other valuable information about your business with the other party, and you want to be sure that the other party will not steal or use it without your approval.
For example, you will request a contract if you are presenting an invention or business idea to a potential investor. Sharing financial and marketing information with potential buyers is also confidential. Demonstrating a new product is another typical situation that requires precautionary measures, ie the use of non-disclosure agreements. These documents come in two formats and they are a mutual agreement or a unilateral agreement. However, if you don’t like the idea of sharing confidential information, just let the company know. Remind the other party that you do not want to receive confidential information from them and that you do not see the need for a common form if requested.
4. Negotiation time
Time is one of the most common causes of M&A problems. If the process takes too long, the prices and conditions only get higher and the agreement usually falls apart. There is also the possibility of new problems, which leads to lower prices. In order for the deal to close, the sales party needs to take the initiative.
5. Quick decision making
Decisions are not made hastily. It is necessary to assess what is important and what is not. That is why it is important to have the ability to make quick decisions during negotiations. The advice you seek from financial and legal advisers will help you the most. You should always keep in mind your benefit and how to effectively trade unimportant points while your goal is much more important points.
6. Price consideration
These are issues that you need to address at the earliest stage of the process. Consider payment methods and deadlines. Also consider stock management as well as the amount of compensation. In addition, think about the conditions of the shares, preferences in liquidation, redemption rights, etc. Take into account the amount of interest and repayment of principal, bills of exchange and arrears. Also check the possibility of expedited payment of the note in case of violation by the customer.
When concluding a deal, gather all the information that will give you a clear picture of how the earnings work, as well as the milestones that need to be met, the payments that need to be made and the protection. This includes inspection rights and everything else. Prepare to talk about earnings, because this part of the negotiation is very complex and tends to be a source of long-term disputes. Litigation has sometimes been involved in this, but the precise determination of these provisions is essential for business.
7. Hiring a reliable lawyer
In order for everything to go smoothly, hire an experienced and reliable advisor. Whether or not you already have an expert representing your company, you need to look for another expert. The company’s current advisor may have done a great job outside of the M&A context, but he will often not be an adequate choice for this event. You need someone who is competent enough and who will spend their full time on an M&A event. He will be committed enough, which means that the process will be much faster.
The key to success is good management of a large database of relevant information about the goal, customers, finances, products and other provisions. It is also important to have experts with you who will provide you with adequate advice at all times.