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Explain comprehensive timeline events in mergers and acquisition
In simple words, merger and acquisition is nothing but combining two or more companies to form a single company. Merger and acquisitions help in achieving strategic goals, alternative to organic growth. In sellers prospective Merger and acquisitions gives cash out or to get more risk and reward in newly formed companies.
Mergers and acquisitions enhance values for both buyer and user. For buyer merger and acquisitions accelerate with new channels and products, decrease or reduction in competition, effective supply chain management.
Unsuccessful mergers and acquisitions hurt both buyer and seller. Some of the reasonsfor unsuccessfulness are integration mismanagement, poor due diligence, over estimation etc.
Merger and acquisition doesn't happen overnight, it will take months or sometimes years to complete. Thought of merger or acquisition is a good idea but in the bigger picture it is a process of lots ups and downs, highs and lows.
The scariest point in the deal is "approved" because lots of internal factors are considered and sometimes companies don’t have control over it (shareholder and government plays an important role than a company).
Post integration is another critical point because outside factors affect it. Depending on the type of deal, merger and acquisition will take months or years of time to get formalized.
Starting from searching a buyer to shareholders and approvals is a complex process.
For understanding, the process is divided into three phases namely,
Timeline activities are divided into three phases, which are explained below −
- Depending on company needs, top management may plan to buy asset/assets or sell asset/assets or take over a new company.
- Before going to buy or sell many factors are considered as competition, market, customers and other industry related factors.
- Companies will go for SWOT analysis and gaps are filled. To fill the gaps, companies will develop a plan for merger or acquisition. The plan consists of needs, targets, contingencies, backups.
- With research and planning, the team will search for a target and make the firm/company more competitive in the market and their mission.
- Next stage is implementation. In this stage, negotiations and due diligence takes place.
- Here, risk management, payment method, tax considerations and accounting issues will be considered in deal structure.
- Due diligence is like the final step before going for deal closing. In this, operational, technologies and financial review will take place.
- Next and final stage is closing. In this, after all the negotiations, companies will go for approvals.
- The Government approves the deal considering the market share of firms. After getting approvals, the companies will go for an integration process.
- New organisation, setting up the requirements, cultural issues, merging of employees etc. comes under integration process.
- Companies will enjoy their returns in a few years. Sometimes, tough deals will sail smoothly and easy deals may face some challenges and take more time.
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