When it comes to business acquisitions a properly structured deal is crucial for both the buyer and seller. The seller has invested a lot of blood, sweat and time into the company so they want to get the most value for their efforts and the buyer wants to be sure they are purchasing a profitable business with a future of growth.
A successful acquisition deal starts with a well-defined strategy, which should include a list of strategic targets to pursue and monitor on a daily basis. Then, the M&A team will conduct due diligence to determine how a potential target fits into the overall strategy.
Once the M&A team has completed due diligence and has found a suitable opportunity, they will proceed to negotiate the terms of the transaction. This process will involve the M&A team working with lawyers to formulate a deal that outlines all of the terms and conditions that are acceptable for both parties.
There are many ways an M&A can be structured. One common way is through a stock purchase where the acquiring company will buy the entire stock of the target company for cash. Another common method is an asset sale where the acquiring company will purchase only specific assets of the target and assume all of the liabilities. Finally, a reverse merger is an option where a private company that has strong prospects will buy a publicly listed shell and then merges into it, creating a new public company with tradable shares.