The M&A Process Explained

The M&A Process Explained

An image showing a deal room where the M&A process takes place.

Key Takeaways About The M&A Process:

This guide is designed to explain to readers what someone is referring to when they talk about the M&A process. Here, we explain the process more generally but we have added two additional guides aimed at explaining the process more granularly, distinguishing between the buy-side and sell-side processes. Here are some key takeaways about the M&A process in general:

  • When someone talks about the  "M&A process" they're referring to the process of how a merger or an acquisition deal is done.  
  • The purpose of trying to understand the M&A process is to understand the steps taken to complete a deal and how they fit together—so the process can be broken down and visualized.
  • The process is naturally different when we look at a buy-side deal versus a sell-side deal. We will explain this and include links to additional posts, showing how those two processes work.

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A Brief Overview of Mergers and Acquisitions:

To better understand this guide, and how the M&A process works, we recommend that you read our companion guide: Intro to Mergers and Acquisitions, first. Borrowing from that guide, we will first explain the difference between mergers and acquisitions.

The terms “merger” and “acquisition” are sometimes used interchangeably, but they refer to different things.

merger is when a business decides to combine with another business with the intention to operate as a single legal entity. Essentially a merger is a combination of two businesses. Generally, the two companies entering into a merger are equal in size. Often the objective of a merger is for both companies to gain access to a larger market, reduce competition between them, and achieve economies of scale. An example of a merger is when Heinz merged with Kraft in 2015.

The term acquisition refers to when one business buys all or part of another business’ stock or assets. Acquisitions differ from mergers in that mergers are a consolidation of two businesses and an acquisition is when one company takes over another company. Often, when one business acquires another, the acquired company doesn’t change its name and continues to maintain its own organizational structure, independently of the acquiring business. Commonly, an acquisition is made to take control of another company in order to eliminate a competitor, or to create financial synergies between them.  An example of an acquisition is when Facebook acquired WhatsApp in 2014, for $22 billion.

Sell-Side Versus Buy-Side Process

In the interest of keeping this article as short as possible, we've created two additional articles, explaining the steps typically taken in a buy-side as well as a sell-side deal. If we were to include both of these processes in the same article, it would be more confusing than addressing them separately.

When we talk about the buy-side process, we're looking at the process from the perspective of the acquirer. Acquirers can be other companies, or financial institutions, or they can be individuals. When we look at the buy-side M&A  process, we're looking at it from the perspective of an investor.

When we look at the sell-side M&A process, we're looking at it from the seller's perspective. The sellers are the shareholders who own the business. When we look at the M&A process from a sell-side perspective, we see the process the owners take to exit their company.

Naturally, these processes look slightly different.

The buy-side M&A process starts when the acquirer defines their acquisition strategy and starts looking for businesses that may be a good fit. You can learn more about the buy-side process here.

The sell-side M&A process starts when the business owner decides to sell. Typically the first step in the process is to hire an M&A advisor. M&A advisors work with the seller pre-transaction to increase the value of the business before it's brought to market, and they act as the intermediaries that find the buyers and execute the deal. You can learn more about the sell-side M&A process here.

To learn more about the M&A process, we recommend you read those articles which will break down the process in a more relevant way based on the perspective you're trying to understand it from.

Examples Completed M&A Deals:

Here are some examples of the M&A process completed and you can look these deals up to get a better understanding of successful acquisition strategy. Here are five examples of completed mergers and acquisitions deals:

  • Salesforce acquired Slack in 2021 for $27.7 billion
  • Facebook acquired WhatsApp in 2014 for $22 billion
  • Coca-Cola acquired Monster Energy in 2015 for $2.15 billion
  • Heinz & Kraft merged together in 2015
  • Pfizer and Warner Lambert merged together in 1999

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