7 Things You Need To Know About Mergers & Acquisitions

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7 Things You Need To Know About Mergers
Acquisitions
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1) Mergers and acquisitions involve a
considerable amount of due diligence by the buyer.

• Private equity buyers mostly follow stringent due
  diligence procedures that will entail an
  intensive and thorough investigation of the
  selling company by ample of buyer employee and
  advisory teams.
• The online data room would include selling the
  companys essential documents related to
  corporate, contracts, employee information,
  intellectual property information, capitalization
  table, financial statements, and much more.
• In accordance to MA deals, and experienced
  counsel in mergers and acquisitions can provide
  the selling company with an elaborate list of the
  types of documents that potential buyers will
  expect to see in an MA-focused online data room.

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2) Valuation of Mergers and acquisition is
negotiable

• When two parties negotiate, many factors are
  involved when we talk about MA deals. Just like
  other terms involved in MA deals, similarly, it
  is substantial to understand offer price and
  valuation. The factors include
• Whether the buyer is a financial buyer or a
  strategic buyer.
• The trends in your companys historical financial
  performance.
• The valuation used in the last round of financing
  in the company.
• The business sector of your company.
• Business, financial and legal risks your company
  faces.
• Whether there are multiple bidders or a single
  interested party.
• Whether your company is a meaningful IPO
  candidate.

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3) Mergers and acquisitions can take a long
period to market

• Usually, mergers and acquisitions can take a long
  period from inception through consummation (4 to
  6 months). The time frame will depend on the
  urgency of the buyer to perform due diligence and
  finish the transaction, and whether the selling
  company can run a competitive process to sell the
  company, generating interest from multiple
  bidders.
• However, certain dimensions can help in
  shortening the time frame like
• Conducting an auction process so that potential
  buyers will be forced to make decisions on a
  shorter time frame in a competitive environment.
• Seller can have a draft disclosure schedule
  ready.
• PowerPoints should be prepared and vetted early.
• The seller should place all its key contracts,
  financial statements, corporate records and other
  material information in an online data room early
  in the process.
• An experienced negotiator for MA deals should be
  appointed to take quick decisions.

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4) Multiple potential dealers to select the best
deal.

• As the phrase goes more the merrier.
  Similarly, when there are multiple dealers, it
  will help the seller to get the best possible
  deal.
• Sealers can often obtain a higher price, better
  deals or both. With multiple bidders, each bidder
  can help in arriving at a favourable deal.
• Sellers prefer setting up an auction or a
  competitive bidding process to avoid being
  trapped in an exclusive demand.
• When multiple interested parties are involved in
  the bidding process, negotiation becomes more
  effortless.

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5) Hire an Investment Banker

• In the MA deals, an investment banker should
  provide advice, drive a focused process, act as a
  right partner to the companys CEO, the board of
  directors and management team.
• What is the role of an investment banker in MA
  deals?
• Help in preparing confidential documents for
  potential buyers.
• Design and execute an optimal sale process.
• Identify and contact prospective buyers.
• Assist the seller with an online data room.
• Help with negotiations and other deals.
• Coordinate the sellers responses to buyer due
  diligence requests.
• Advice on comparable market valuations.
• Render a fairness option.
• Help the management team in presentations to the
  companys BODs

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6) Definitive acquisition agreement is essential

• A well-drafted acquisition agreement protects the
  credibility of the seller. Some of the provisions
  covered in an acquisition agreement are
• Transaction structure including share purchase,
  asset purchase, or merger etc.
• Purchase price and related financial terms.
• The milestones or other triggers for earnouts or
  contingent purchase price payments.
• The nature and extent of the representations and
  warranties.
• The scope and exclusions to the indemnity.
• Provisions for termination of the acquisition
  agreement.
• The treatment of employee stock options.
• The responsibility and cost for obtaining any
  consents and government approvals.
• The allocation of risks concerning unforeseen
  circumstances and liabilities.

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7) Hire a great MA Lawyer

• MA transactions include complicated, all-purpose
  agreements and deal structures as well as
  challenging legal issues.
• For a successful mergers and acquisitions
  process, the selling company should hire outside
  counsel that specializes in mergers and
  acquisitions deals.
• The MA lawyer appointed should have complete
  command of the substantial applicable law and
  must be a skilled advisor, negotiator and
  draftsperson.
• Moreover, a legal specialist MA team that has
  worked together on many prior deals likely will
  be more efficient than a couple of attorneys who
  together claim to be expert in the many
  speciality areas that are critical to an MA
  deal.