What is M&A?
M&A is a complicated business procedure and represents a major change in corporate strategy. It can lead to positive growth and a higher return on investment, but it could be disastrous if the strategy is not properly thought out and executed.
When you buy another board of directors company, you can expand your market by reaching out to new customers and boosting the amount of revenue. However, choosing the right company is essential to achieving success. A quick acquisition could cause a failure in integration, which can be expensive for the buyer as well as the customer base.
Many M&A transactions involve either a horizontal merger (combining rivals in the same industry) or a vertical merger (extending supply chains). Cross-sector consolidation is also common and involves retail companies buying tech companies or ecommerce businesses.
The first steps of the M&A procedure include preparing an inventory of potential target companies, conducting high-level discussions with each to examine how they can strategically work together, and preparing for due diligence. Negotiating and finalizing the deal is the next step. The acquiring company will pay cash or stock subject to the terms of the deal.
The sale of a business is concluded when all closing conditions are completed and the parties sign a sales agreement. Antitrust authorities will scrutinize the deal during the M&A to ensure that it doesn’t create monopolies on certain markets. After the acquirer has passed the antitrust review, it can close the acquisition and transfer ownership of the target to the buyer.