M&A Process

by Group 4

RANAJIT ROUT (MBA20096) A A L E K H TA K ( M B A 2 0 11 8 )

SAKSHI VERMA (MBA20101) ANSHIKA SINGHAL (MBA20121)
RUCHI JAIN (MBA20100) AY U S H M O H A N S I N G H ( M B A 2 0 1 2 5 )
S H R U T I A G R AWA L ( M B A 2 0 1 0 8 ) MANMIT KAUR CHHABRA
(MBA20246)
 ROLE OF PLANNING IN MERGERS & ACQUISITIONS

2 STAGES OF ACQUISITION PROCESS:

Planning: It articulates the mission and vision of the firm with the objective
• Planning to maximize shareholders value. Business strategies are made which include:
• Developing Business
• Acquisition Plan • Corporate Strategy set by the top management.
• Business Strategy set by the management of specific operating unit.
• Implementation • Implementation strategy refers to the way in which the firm chooses to
• Search execute the business strategy.
• Screening • The merger/acquisition plan is a specific type of implementation
• Contacting the target strategy and describes in detail the motivation for the acquisition and how
• Negotiation and when it will be achieved.
• Integration planning • Functional strategies describe in detail how each major function within
• Closing the firm will support the business strategy.
• Integration • Contingency plans are actions that are taken as an alternative to the
• Evaluation firm’s current business strategy.

MANMIT KAUR CHHABRA (MBA20246)

 MERGER & ACQUISITION PROCESS

Business Acquisition First

Search Screen
Plan Plan Contact

Integration
Negotiation Closing Integration Evaluation
Plan

MANMIT KAUR CHHABRA (MBA20246)

Phase 1
BUILDING THE BUSINESS PLAN/MODEL
 Phase
Phase 1:
1:
Building
Building the
the
Business
Business STEPS TO DEVELOP THE BUSINESS PLAN:
Plan/Model
Plan/Model
Phase 2: M&A • External Analysis: Determines where a firm might compete and how to compete
Implementation
Plan
• Internal Analysis: Determines the firm’s strengths and weaknesses relative to its competitors in the market
Phase 3:
The Search
Process
Phase 4:
The Screening COMBINATION OF THESE TWO ANALYSIS IS CALLED SWOT ANALYSIS.
Process
• Defining Mission & Vision Statement: Summarizes where and how the firm has chosen to compete, based on
Phase 5: external analysis.
First Contact
• Setting Objectives: Quantitative measures of financial and non-financial performances are developed
Phase 6: • Selecting the Business Strategy: To achieve the objectives in an acceptable time period, subject to constraint
Negotiation identified earlier. It defines how the business intends to compete.
Phase 7: • Selecting Implementation Strategy: It articulates how to implement the business strategy from the available
Developing the reasonable options. The firm may choose to act independently, partner with others or acquire/merge with
Integration Plan
another firm.
Phase 8: • Development of Functional Strategy: Defines roles, responsibility, and resource requirement for each major
Closing
functional area.
Phase 9: • Establishing Strategic Controls: It monitors the actual performance to plan, implement incentive systems, and
Implementing Post-
closing Integration take corrective actions. If there is deviation from the implementations plans, the firm may take corrective
actions.
Phase 10:
Conducting a Post-
closing Evaluation

MANMIT KAUR CHHABRA (MBA20246)

 Phase
Phase 1:
Building
1:
Building the
Business
the EXTERNAL ANALYSIS
Business
Plan/Model
Plan/Model External Analysis can be done with the help of Michael Porter’s Five Forces model. The basic model can also be
Phase 2: M&A modified, and other factors can be taken into consideration. The potential to earn abnormal profits is determined by the
Implementation
Plan intensity of competition. Competition is more intense when: Entry barriers are low, exit barriers are high, competitors
Phase 3:
use a common technology, switching costs are low, there are many substitutes, there are many competitors who are
The Search comparable in size, and market growth is slowing.
Process
Phase 4:
The Screening
Factors affecting 5 Forces model:
Process 1. Bargaining Power of Customers: It depends on customers buying criteria, price sensitivity, switching costs,
Phase 5:
availability of substitutes. For example, a customer who wishes to have a high-quality product will be ready to pay
First Contact extra to have it. Also, customers are highly price sensitive when large undifferentiated products and low switching
costs products is available. Customers having substantial bargaining power can force selling prices down, negotiate
Phase 6: favorable credit terms, and squeeze supplier margins
Negotiation
2. Bargaining Power of Suppliers: Suppliers in this context include material, services, and capital. Their bargaining
Phase 7:
Developing the power is impacted by switching costs, differentiation, their number and average size compared to the customer, and
Integration Plan the availability of substitutes.
Phase 8: 3. Degree of Competitive Rivalry: The intensity of competition among current competitors is largely determined by
Closing
the industry growth rate, industry concentration, degree of differentiation and switching costs, scale and scope
Phase 9: economies, excess capacity, and exit barriers. If an industry is growing rapidly, existing firms have less need to
Implementing Post-
closing Integration
compete for market share based on aggressive pricing. If an industry is highly concentrated, firms can more easily
coordinate their pricing activities. Intense competition can arise even when the industry is highly concentrated.
Phase 10:
Conducting a Post- Such a market structure is called an oligopoly .
closing Evaluation

MANMIT KAUR CHHABRA (MBA20246)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model
4. Potential New Entrants: It is affected by scale/scope economies, first mover advantage, legal barriers (e.g.,
Phase 2: M&A
patents), limited access to distribution channels, product differentiation, and potential for retaliation from
Implementation current competitors. Competitors within an industry characterized by low barriers to entry have limited
Plan
pricing power. The first mover advantage also creates entry barriers because first movers achieve widespread
Phase 3: brand recognition, establish industry standards, develop exclusive relationships with key suppliers and
The Search
Process distributors.
Phase 4:
The Screening 5. Availability of Substitute Goods: The selling price of one product compared to a close substitute determines
Process
the threat of substitution. Potential substitutes could come from current or potential competitors.
Phase 5:
First Contact
6. Bargaining Power of Labor Force: It is affected by the degree of unionization, management/labor harmony,
Phase 6:
and availability of critical skills. Work stoppages create opportunities for competitors to gain market share.
Negotiation Long-term impacts on productivity and production costs can be resulted.
Phase 7:
Developing the 7. The Degree of Government Regulation: Governments may choose to regulate industries that are heavily
Integration Plan
concentrated, are natural monopolies (e.g., electric utilities), or provide a potential risk to the public.
Phase 8: Regulations also create barriers to both entering and exiting an industry.
Closing

Phase 9:
8. Global Exposure: It refers to the extent to which an industry/market is affected by export and import
Implementing Post- competition. Example: Automotive industry is widely viewed as a global industry in which participation
closing Integration
requires having assembly plants and distribution networks in major markets worldwide.
Phase 10:
Conducting a Post-
closing Evaluation

MANMIT KAUR CHHABRA (MBA20246)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model
INTERNAL ANALYSIS
Phase 2: M&A
Implementation
Plan

Phase 3: • Internal Analysis is done to determine the firm’s strengths and weaknesses.
The Search
Process
Phase 4: • Internal and External Analysis when combined forms SWOT Analysis.
The Screening
Process
• Based on the results of this analysis, firms can select how to prioritize opportunities and threats and how to
Phase 5: focus corporate resources to exploit selected opportunities or to reduce their vulnerability to perceived threats.
First Contact

Phase 6:
• Example: Facebook opted to acquire WhatsApp to adapt to the shift of internet users to mobile devices and to
Negotiation preclude competitors such as Google from acquiring this explosively growing mobile messaging firm.
Phase 7:
Developing the • Facebook dominates the social network space and also how the world communicates. Facebook saw this as an
Integration Plan
opportunity to build an app that can support social interaction. It faced threat from Google as it may acquire
Phase 8: the business.
Closing

Phase 9:
• In 2014, Facebook acquired WhatsApp because people wanted to communicate in different ways.
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

MANMIT KAUR CHHABRA (MBA20246)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model
Phase 2: M&A
DEFINING THE MISSION/VISION STATEMENT
Implementation
Plan

Phase 3:
The Search In 2009, Apple Computers board and management changed their company name to Apple Inc to reflect the
Process firm's desire to change from being a computer hardware and software company to a consumer electronics firm
Phase 4: characterized by iPod- and iPhone-like products. 
The Screening
Process A mission/vision statement describes the corporation’s purpose for being, what business it is in, and where it
Phase 5:
hopes to go.
First Contact
A good mission statement:
Phase 6:  Should include references to the firm’s targeted markets
Negotiation
 Should define the product offering relatively broadly - to allow for the introduction of new products that
Phase 7: might be derived from the firm’s core competencies
Developing the
Integration Plan  Should state management beliefs with respect to the firm’s primary stakeholders
Phase 8:
 Should not be defined too broadly or too narrowly
Closing  Must be widely understood, communicated and accepted
Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

SHRUTI AGARWAL (MBA20108)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model
SETTING STRATEGIC OR LONG-TERM BUSINESS
Phase 2: M&A
Implementation
OBJECTIVES
Plan

Phase 3:
The Search
Process A business objective is what must be accomplished within a specific period. Good business objectives are
Phase 4: measurable and have a set time frame in which to be realized.
The Screening
Process A good business objective must not be vaguely described. It should be specific. 
Phase 5:
First Contact For example, a poor business objective will state that the firm wants to increase its revenue or rate of return
substantially but instead they should state what is the amount of the increase in revenue and what percentage
Phase 6: of increase in the rate of return they want.
Negotiation
There are various common business objectives:
Phase 7:
Developing the • Growth objectives: which includes seeking to grow earnings per share (EPS), book value, cash flow, or
Integration Plan
revenue.
Phase 8: • Diversification objectives: describing the firm desires to sell current products in new markets, new
Closing
products in current markets, or new products in new markets.
Phase 9: • Flexibility objectives: aiming to possess production facilities and distribution capabilities that can be
Implementing Post-
closing Integration shifted rapidly to exploit new opportunities as they arise.
Phase 10: • Technology objectives: reflecting a firm’s desire to possess capabilities in core technologies.
Conducting a Post-
closing Evaluation

SHRUTI AGARWAL (MBA20108)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model  SELECTING THE CORPORATE AND BUSINESS LEVEL STRATEGIES
Phase 2: M&A
Implementation
Plan

Phase 3: Corporate-Level Strategies

The Search
Process
Phase 4:
The Screening
Process Corporate-level strategies may include all or some of the business units that are either wholly or partially owned by
the corporation.
Phase 5:
First Contact Various forms of corporate level strategies:
• A growth strategy focuses on accelerating the firm’s consolidated revenue, profit, and cash flow growth and
Phase 6:
Negotiation may be implemented in many different ways.
Phase 7:
• A diversification strategy involves a decision at the corporate level to enter new businesses. 
Developing the • An operational restructuring strategy, sometimes called a turnaround or defensive strategy, usually refers
Integration Plan
to the outright or partial sale of companies or product lines, downsizing by closing unprofitable or
Phase 8: nonstrategic facilities, obtaining protection from creditors in bankruptcy court, or liquidation.
Closing
• A financial restructuring strategy describes actions by the firm to change its total debt and equity structure.
Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

SHRUTI AGARWAL (MBA20108)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model MICROSOFT ACQUIRED MOJANG
Phase 2: M&A
Implementation  CEO Satya Nadella said in a statement:
Plan

Phase 3: "Gaming is a top activity spanning devices, from PCs and consoles to tablets and mobile, with billions of hours
The Search
Process spent each year. Minecraft is more than a great game franchise – it is an open world platform, driven by a vibrant
community we care deeply about."
Phase 4:
The Screening
Process  Strategic sense behind it:
Phase 5: This will support the firm’s growth strategy revolving around cloud computing, mobile platforms, content, and
First Contact
productivity software.
Phase 6: The acquisition enabled Microsoft to own the top game on Xbox and also the leading paid app on iOS and
Negotiation
Android in the United States.
Phase 7:
Developing the The acquisition ensures that Minecraft will also run on Microsoft’s Windows Phone mobile operating system
Integration Plan
(making the firm’s own mobile operating system more competitive).
Phase 8:
Closing  Microsoft has finalized its $7.5 billion deal to acquire ZeniMax Media. "As a proven game developer and
publisher, Bethesda has seen success across every category of games, and together, we will further our ambition
Phase 9: to empower the more than three billion gamers worldwide." CEO Nadella said in a released statement
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

SHRUTI AGRAWAL (MBA20108)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business
Plan/Model
Plan/Model
Phase 2: M&A
Implementation Business-Level Strategies
Plan

Phase 3:
The Search
Process A firm should choose the business strategy from among the range of reasonable options that enables it to
Phase 4: achieve its stated objectives in an acceptable period, subject to resource constraints. 
The Screening
Process
Business strategies fall into one of four basic categories:
Phase 5: o Price or Cost Leadership: this strategy is designed to make a firm the cost leader in its market
First Contact
and including the experience curve and product life cycle, introduced and popularized by the Boston
Consulting Group (BCG).
Phase 6:
Negotiation o Product Differentiation: encompasses a range of strategies in which the product offered is perceived
by customers to be slightly different from other product offerings in the marketplace.
Phase 7:
Developing the o Focus or Niche Strategies: through this, firms concentrate their efforts by selling a few products or
Integration Plan
services to a single market, and they compete primarily by understanding their customers’ needs better
Phase 8: than the competition. 
Closing o Hybrid Strategies: involves some combination of the three strategies just discussed.
Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

SHRUTI AGARWAL (MBA20108)

 Phase
Phase 1:
1:
Building
Building the
the
Business
Business CHOOSING AN IMPLEMENTATION STRATEGY
Plan/Model
Plan/Model
Phase 2: M&A Once a firm has determined the appropriate business strategy, it must decide the best means of
Implementation
Plan
implementation. Typically, a firm has five choices: 
Phase 3:
• Solo venture or build (organic growth)                 
The Search
Process
• Partner with others
Phase 4: • Invest
The Screening
Process • Acquire
Phase 5: • Swap assets
First Contact

Phase 6:
FUNCTIONAL STRATEGIES
Negotiation
• Functional strategies focus on short-term results and generally are developed by functional
Phase 7: areas. These strategies result in concrete actions for each function or business group, depending
Developing the
Integration Plan on the company’s organization.

Phase 8: • The company’s business mission, business strategy, implementation strategy, and functional
Closing strategies are related.
Phase 9:
Implementing Post-
closing Integration
STRATEGIC CONTROLS
Phase 10: It monitors the actual performance to plan and includes Incentive Systems and Monitoring Systems.
Conducting a Post-
closing Evaluation

SHRUTI AGARWAL (MBA20108)

Phase 2
BUILDING THE MERGER-ACQUISITION IMPLEMENTATION
PLAN
 Phase 1: Building
the Business
Plan/Model
FOCUS OF ACQUISITION PLAN: ACQUISITION PROCESS
Phase
Phase 2:2:
Building
Building the
the Tactical/Short-term Initial Steps (Planning Process):
M&A
M&A
Implementation
Implementation Includes: ◦ Implementation Plan
Plan
Plan ◦ Criteria to use when searching acquisition targets
Phase 3:
◦ Management Objectives
The Search ◦ Resource Assessment
Process Steps thereafter:
Phase 4:
◦ Market Analysis ◦ Contacting the target
The Screening ◦ Senior Management’s guidance
Process ◦ Developing a negotiation strategy
◦ Timeline ◦ Determining initial offer price
Phase 5:
First Contact ◦ Name of the Deal Owner ◦ Developing financing and integration plans
Phase 6:
Negotiation

Phase 7:
Deal Owner:
Developing the ◦ High-performing manager
Integration Plan
◦ Should be appointed early in the process

Performance
Post-merger
Phase 8:
Closing ◦ May be a full-time or part-time position

Phase 9:
Implementing Post-
closing Integration
Responsibilities:
Operation and integration of the target
Phase 10: Pre-merger Planning
Conducting a Post-
closing Evaluation

RUCHI JAIN (MBA20100)

 Phase 1: Building
the Business
Plan/Model
LINKAGES B/W BUSINESS & ACQUISITION PLAN OBJECTIVES
Phase
Phase 2:2:
Building
Building the
the
M&A
M&A
Implementation
Implementation
Plan
Plan
Phase 3:
The Search
Process Financial
Phase 4: Objectives
The Screening
Process

Phase 5:
First Contact

Phase 6:
Negotiation

Phase 7:
Developing the
Integration Plan

Phase 8: Non-financial
Closing
Objectives
Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

RUCHI JAIN (MBA20100)

 Phase 1: Building
the Business
Plan/Model
Phase
Phase 2:
Building
2:
Building the
M&A
M&A
the RESOURCE/CAPABILITY EVALUATION
Implementation
Implementation
Plan
Plan
Phase 3:
The Search
Process Financial Resources:
Phase 4: ◦ Internally generated cashflow in excess of normal operating requirements
The Screening
Process ◦ Funds from equity and debt markets
Phase 5:
First Contact
“Financial theory suggests that an acquiring firm will always be able to attract sufficient
Phase 6:
Negotiation
funding for an acquisition if it can demonstrate that it can earn its cost of capital.”
Phase 7:
Developing the In practice, senior management’s risk tolerance plays an important role in determining what
Integration Plan
the acquirer believes it can afford to spend on a merger or acquisition.
Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

RUCHI JAIN (MBA20100)

 Phase 1: Building
the Business
Plan/Model
TYPES OF RISKS INVOLVED IN AN ACQUISITION
Phase
Phase 2:2:
Building
Building the
the Operating Risk
M&A
M&A
Implementation
Implementation ◦ Ability of acquirer to manage the acquired company
Plan
Plan
Phase 3:
◦ Higher in M&As in markets unrelated to acquirer’s core business
The Search
Process Financial Risk
Phase 4: ◦ Acquirer’s ability and willingness to leverage a transaction
The Screening
Process ◦ To retain specific credit rating, acquirer must maintain certain levels of financial ratios like debt-to-total capital
Phase 5:
and interest coverage
First Contact ◦ A firm’s incremental debt capacity can be approximated by comparing the relevant financial ratios to those of
comparable firms in the same industry that are rated by the credit rating agencies
Phase 6:
Negotiation ◦ The difference represents the amount the firm, in theory, could borrow without jeopardizing its current credit
rating
Phase 7:
Developing the ◦ Shareholders’ willingness to accept dilution of near-term EPS
Integration Plan
◦ EPS dilution tolerance of equity investors may be assessed through informal discussions with Wall Street
Phase 8: analysts and an examination of comparable deals financed by issuing stock
Closing
Overpayment Risk
Phase 9:
Implementing Post- ◦ Dilution of EPS or a reduction in its earnings growth can result from paying significantly more than the
closing Integration
economic value of the acquired company
Phase 10: ◦ The effects of overpayment on earnings dilution can last for years
Conducting a Post-
closing Evaluation

RUCHI JAIN (MBA20100)

 Phase 1: Building
the Business
Plan/Model
Phase
Phase 2:
Building
2:
Building the
the
MANAGEMENT GUIDANCE
M&A
M&A
Implementation
Implementation
Plan
Plan
• Determining the criteria used to evaluate prospective candidates (e.g., size, price range, current profitability,
Phase 3: growth rate, geographic location, and cultural compatibility)
The Search
Process • Specifying acceptable methods for finding candidates (e.g., soliciting board members; analyzing
Phase 4:
competitors; contacting brokers, investment bankers, lenders, law firms, and the trade press)
The Screening • Establishing roles and responsibilities of the acquisition team, including the use of outside consultants, and
Process
defining the team’s budget
Phase 5: • Identifying acceptable sources of financing (e.g., equity issues, bank loans, unsecured bonds, seller
First Contact
financing, or asset sales)
Phase 6: • Establishing preferences for an asset or stock purchase and form of payment
Negotiation
• Setting a level of tolerance for goodwill (i.e., the excess of the purchase price over the fair market value net
Phase 7: acquired assets: acquired assets less assumed liabilities)
Developing the
Integration Plan • Indicating the degree of openness to partial rather than full ownership
Phase 8:
• Specifying willingness to launch an unfriendly takeover
Closing • Setting affordability limits (which can be expressed as a maximum price to after-tax earnings, earnings
Phase 9:
before interest and taxes, or cash flow multiple or maximum dollar amount)
Implementing Post-
closing Integration
• Indicating any desire for related or unrelated acquisitions
Phase 10:
Conducting a Post-
closing Evaluation

RUCHI JAIN (MBA20100)

 Phase 1: Building
the Business
Plan/Model
Phase
Phase 2:2:
Building
Building the
the
M&A
M&A

TIMETABLE
Implementation
Implementation
Plan
Plan
Phase 3:
The Search
Process Plan objectives
Phase 4:
The Screening
Process
Timetable

Phase 5: Resource/capability evaluation

First Contact

Phase 6:
Management guidance
Negotiation
Search plan
Phase 7:
Developing the
Integration Plan Negotiation strategy
Phase 8: Determine initial offer price
Closing

Phase 9: Financing plan

Implementing Post-
closing Integration
Integration plan
Phase 10:
Conducting a Post-
closing Evaluation

RUCHI JAIN (MBA20100)

Phase 3
THE SEARCH PROCESS
Phase 1: Building
the Business
Plan/Model
This phase involves searching for acquisition candidates by establishing some primary selection criteria.
Phase 2: M&A
Implementation
Plan
Some of these criteria include:

Phase
Phase 3:
3: 1. Industry type
The Search
The Search
Process
Process 2. Deal size
Phase 4:
The Screening
3. Geographical constraint
Process

Phase 5:
First Contact
The next step is to search available computerized databases using the selection criteria. The requirement of
Phase 6: information databases can be fulfilled from following sources:
Negotiation
1. Common database and directory service providers (Disclosure, Dun & Bradstreet, S&P’s Corporate
Phase 7:
Developing the Register)
Integration Plan
2. Help from law, banking, and accounting firms
Phase 8:
Closing
3. Investment banks, brokers and leveraged buyout firms
Phase 9:
Implementing Post- 4. Financial analyst sites (Yahoo! Finance, Hoover’s and EDGAR Online)
closing Integration

Phase 10:
5. Advertising in the Wall Street Journal or trade press (if confidentiality is not an issue) 
Conducting a Post-
closing Evaluation

ANSHIKA SINGHAL (MBA20121)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan Finding information about a primary owned firms is a major problem. Sources as such Dun & Bradstreet
Phase
Phase 3:
3:
and Experian may only provide fragmentary data. Publicly available information may offer additional
The Search
The Search details.
Process
Process
Credit rating agencies conduct independent assessment of viability of both private and public owned
Phase 4:
The Screening
companies. Information about the target firm be available on the rating agency website through a paid
Process subscription.
Phase 5: The IPO market can also expedite the search process by providing the information about the private firms
First Contact
by comparing the prospectus of similar kind of company which had ‘gone public’. It helps in identifying
potential growth aspects and estimation of financial numbers such as sales, profit and cashflow can also
Phase 6:
Negotiation be estimated to a certain extent.
Phase 7: Failed takeover bids can also be a source of information for selecting the potential target firm.
Developing the
Integration Plan
Now-a-days mostly companies, even midsize firms are moving investment banks ‘in-house’. They are
Phase 8: identifying potential targets, doing valuation, and performing due diligence on their own.
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

ANSHIKA SINGHAL (MBA20121)

Phase 4
THE SCREENING PROCESS
Phase 1: Building
the Business
Plan/Model

Phase 2: M&A The screening process is the refinement of the initial search process. It filters the list of candidates
Implementation
Plan created using the primary criteria by using some secondary selection criteria.
Phase 3:
The Search
The some of the secondary selection criteria which are used are:
Process
1. Market Segment
Phase
Phase 4:
4:
The
The Screening
Screening 2. Product Line
Process
Process
3. Profitability
Phase 5:
First Contact
4. Degree of Leverage
Phase 6: 5. Market Share
Negotiation

Phase 7: 6. Cultural Compatibility

Developing the
Integration Plan 7. Age of CEO or controlling shareholder
Phase 8:
Closing
The firm’s approval process may require consensus among the board’s members and senior managers
and the decision to make contact with the target firm may become mired in internal politics.
Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

ANSHIKA SINGHAL (MBA20121)

Phase 5
FIRST CONTACT
Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
An approach strategy should be developed for each target firm. In this potential acquirer develops a profile of each
Implementation firm to be contacted in order to outline the reasons the target firm should consider an acquisition proposal.
Plan
Phase 3: The acquirer company should extend its research beyond the publicly available information and should interact with
The Search customers, suppliers, ex-employees, and trade associations to better understand strengths, weaknesses and objectives
Process of potential target firm.
Phase 4:
The Screening How initial contact is made depends on the size of the company, whether the potential acquirer has direct contacts
Process
with the target, whether the target is publicly or privately held, and the acquirer’s time frame for completing a
transaction.
Phase
Phase 5:
5:
First
First Contact
Contact
Private Owned Company: Greater importance to a deal that “feels right”
Phase 6:   Public Company: Emphasis on getting its shareholders best price
Negotiation
For small companies with no direct contacts, contact can be initiated through a vaguely worded letter expressing
Phase 7:
Developing the interest in joint venture or marketing alliance
Integration Plan
A trusted intermediary can be used to make first contact with the target firm. Intermediaries can be less intimidating
Phase 8: than if you take a direct approach.
Closing

Phase 9:
For public companies, maintaining discretion during the first contact is critical. As leaking out of such information can
Implementing Post- alert the competitors and can have adverse consequences for the target firm.
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

ANSHIKA SINGHAL (MBA20121)

Phase 1: Building
the Business
Plan/Model
Discussing Value
Phase 2: M&A
Implementation
Plan Neither buyer or seller wants to provide an estimate of value. So the usual course of action which is adopted is:
Phase 3:
The Search
1. Choosing a range
Process
Phase 4:
2. Agreeing to a formula to calculate the purchase price
The Screening
Process Preliminary Legal of Transaction Documents: The different legal documents required are:
• Confidentiality Agreement: It is a non-disclosure agreement binding on all parties. In this buyers and sellers
Phase
Phase 5:
5: both disclose their historical financial information. It covers information which is not publicly available and has
First
First Contact
Contact an expiration date.
• Term Sheet: It outlines the primary areas of agreement and is often used as basis for a more detailed LOI. It
Phase 6:
Negotiation
states the purchase price, what is being acquired, limitations to use of proprietary data, a no-shop provision and
a termination date.
Phase 7:
Developing the
• Letter of Intent (LOI): It formally stipulates the reason for the agreement and major terms and conditions. It
Integration Plan also indicates the responsibilities of both the parties while agreement is in force. It also specifies the type of
data to be exchanged and duration and the extent of the initial due diligence. It also describe the due diligence
Phase 8:
Closing
process in great detail, stipulating how the buyer should access the seller’s premises, the frequency and duration
of such access, and how intrusive such activities should be. Failure to satisfy any of these conditions will
Phase 9: invalidate the agreement.
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

ANSHIKA SINGHAL (MBA20121)

Phase 6
NEGOTIATION
Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan It is during this phase that the actual purchase price paid for the acquired business is
Phase 3: determined, and often it will be quite different from the initial target company
The Search
Process valuation
Phase 4:
The Screening
Process
STAGES IN NEGOTIATION:
Phase 5:
First Contact • Refining Valuation
• Deal Structuring
Phase
Phase 6:
6:
Negotiation
Negotiation • Conducting Due Diligence
• The Rise of the Virtual Data Room
Phase 7:
Developing the
Integration Plan
• Developing the Financing Plan
• Defining the Purchase Price
Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model
REFINING VALUATION
Phase 2: M&A
Implementation
Plan A buyer usually requests at least 3–5 years of historical financial data
Phase 3:
The Search The historical data should be normalized, or adjusted for nonrecurring gains, losses, or expenses. Each
Process major expense category should be expressed as a percentage of revenue. By observing year-to-year changes
Phase 4: in these ratios, trends in the data are more discernible.
The Screening
Process

Phase 5:
First Contact

Phase
Phase 6:
6:
Negotiation
Negotiation

Phase 7:
Developing the
Integration Plan

Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan DEAL STRUCTURING 
Phase 3:
The Search
Process
• Initial negotiating position, potential risks, options for managing risk, risk tolerance, and conditions
Phase 4:
The Screening under which either party will “walk away” from the negotiations.
Process
• Understanding potential sources of disagreement, such as the form of payment and legal, accounting,
Phase 5: and tax structures. Identifying conflicts of interest
First Contact
• How ownership is determined, how assets are transferred, how ownership is protected (i.e.,
governance), and how risk is apportioned among parties to the transaction. These decisions will
Phase
Phase 6:
6: influence how the combined companies will be managed, the amount and timing of resources
Negotiation
Negotiation committed, and the magnitude and timing of current and future tax liabilities.
Phase 7: • The acquisition vehicle refers to the legal structure (e.g., corporation or partnership) used to acquire
Developing the the target company
Integration Plan
• The form of payment may consist of cash, common stock, debt, or some combination.
Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Phase 3:
The Search
Process CONDUCTING DUE DILIGENCE
Phase 4:
The Screening
Process
• Due diligence is an exhaustive review of records and facilities.
Phase 5:
First Contact • Legal documents should never be viewed as a substitute for conducting formal due diligence.
• Frequently, the buyer wants as much time as possible, while the seller will want to limit the length
Phase
Phase 6:
6: and scope. 
Negotiation
Negotiation
• Due diligence rarely works to the advantage of the seller because a long and detailed due
Phase 7: diligence is likely to uncover items the buyer will use as a reason to lower the purchase price.
Developing the
Integration Plan

Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
COMPONENTS OF DUE DILLIGENCE
Phase 3:
The Search
Process

Phase 4:
Due diligence consists of three primary reviews:
The Screening
Process
• The strategic and operational review
Phase 5:
First Contact Conducted by senior operations and marketing management asks questions that focus on the seller’s
management team, operations, and sales and marketing strategies.
Phase
Phase 6:
6: • The financial review
Negotiation
Negotiation
The financial review also confirms that the anticipated synergies are real and can be achieved within a
Phase 7: reasonable time frame.
Developing the
Integration Plan • A legal review
Conducted by the buyer’s legal counsel, deals with corporate records, financial matters, management
Phase 8:
Closing and employee issues, tangible and intangible assets of the seller, and material contracts and obligations
of the seller such as litigation and claims. The interview process provides invaluable sources of
Phase 9: information. By asking the same questions of a number of key managers, the acquirer is able to validate
Implementing Post-
closing Integration the accuracy of its conclusions.
Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
BUYER, SELLER, AND LENDER DUE DILIGENCE
Phase 3:
The Search
Process

Phase 4: • Buyer
The Screening
Process Key objectives include identifying and confirming sources of value or synergy and mitigating real or
potential liability by looking for fatal flaws that reduce value.
Phase 5:
First Contact • Seller
By investigating the buyer, the seller can determine whether the buyer has the financial wherewithal to
Phase
Phase 6:
6: finance the purchase. Furthermore, when the seller is to receive buyer shares, it is prudent to evaluate the
Negotiation
Negotiation accuracy of the buyer’s financial statements to determine if earnings have been overstated by looking at
the buyer’s audited statements before agreeing to the form of payment.
Phase 7:
Developing the • Lender
Integration Plan
If the acquirer is borrowing to buy a target firm, the lender(s) will want to perform their own due diligence
Phase 8: in
Closing
Dependent of the buyer’s effort. Multiple lender investigations, often performed concurrently, can be quite
Phase 9: burden some to the target firm’s management and employees. Sellers should agree to these activities only
Implementing Post-
closing Integration
if confident the transaction will be consummated
Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Phase 3:
Due Diligence Disasters - HP & Autonomy (2012)
The Search
Process

Phase 4:
The Screening
Process

Phase 5: • Disaster: US $11.1 billion

First Contact
• HP’s acquired Autonomy for $10.2 billion. 
Phase
Phase 6:
6:
• A series of issues were overlooked, such as inaccurate income statements,
Negotiation
Negotiation balance sheets, cash flows and footnotes. 
Phase 7:
• Autonomy was significantly overpriced, and HP had to write down almost $9
Developing the billion. 
Integration Plan
• The latter became one of the most wasteful purchases of a software asset.
Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
DEFINING THE PURCHASE PRICE
Phase 3:
The Search
Process

Phase 4: • Total Consideration

The Screening
Process The total consideration consists of cash (C), stock (S), new debt issues (ND), or some combination of all three
paid to the seller’s shareholders. It is a term commonly used in legal documents to reflect the different types of
Phase 5:
First Contact
remuneration received by target company shareholders.
• Total Purchase Price
Phase
Phase 6:
6: The total purchase price (PVTPP) or enterprise value of the target firm consists of the total consideration
Negotiation
Negotiation (PVTC) plus the market value of the target firm’s debt (PVAD) assumed by the acquiring company. The
enterprise value is sometimes expressed as the total purchase price plus net debt.
Phase 7:
Developing the • Net Purchase Price
Integration Plan
The net purchase price (PVNPP) is the total purchase price plus other assumed target firm liabilities (PVOAL)
Phase 8: less the proceeds from the sale of discretionary or redundant target assets (PVDA) on or off the balance sheet.
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AALEKH TAK (MBA20118)

Phase 7
DEVELOPING THE INTEGRATION PLAN
Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Due Diligence activity generally commences after the Letter of Intent is signed. It is an investigation to
Phase 3: confirm facts that may impact the buyer's decision to make the purchase. This process helps in refining the
The Search
Process valuation to realise the expected synergies.
Phase 4:
The Screening
Contract Related issues: This majorly involves addressing human resource, customer and supplier issues.
Process Buyers will want to include assurances in the purchase agreement to reduce risk with matters pertaining to
past and present conditions of the seller's business.
Phase 5:
First Contact
Earning Trust: Successful integration of firms require getting employees of both the firms to work to
achieve common objectives to achieve the new common objective. This trust comes from cooperation,
Phase 6:
Negotiation
keeping commitments and achieving goals.

Phase
Choosing Integration Manager: Buyer appoints integration Manager who identifies critical activities of
Phase 7:
7:
Developing
Developing the
the the business acquired such as billing procedures, vendors, quality metrics to determine new standards and
Integration Plan
Integration Plan communicate it to the stakeholders.

Phase 8: No transfer of money takes place up to this phase.

Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AYUSH MOHAN SINGH (MBA20125)

Phase 8
CLOSING
Phase 1: Building
the Business In this phase all the concerned party are asked for consent to finalise the deal. Few important aspect of this phase
Plan/Model
are:
Phase 2: M&A
Implementation
 Gaining necessary approval - The buyer's legal department ensures that all the transaction being carried out
Plan is in compliance with the laws.
Phase 3:  Assigning Customer and Vendor Contract - These contracts before being signed requires many formal
The Search
Process
procedures and negotiations. 
Phase 4:  Completing the acquisition/merger  agreement - This is the final definitive agreement that lists all the rights
The Screening and obligations of the parties both before and after the closing.
Process
• Deal Provisions: This defines the mode and form of payment both in terms of money and shares.
Phase 5:
First Contact
• Price: The price of the deal may be fixed or subject to future adjustment based upon the parameters set.
• Escrow and Holdback Clauses: This clause protects the buyer from losses if the seller claims and
Phase 6: obligations are not satisfied. Under this clause the portion of purchase price is withheld by a third party.
Negotiation
• Go Shop Provision: Once the target company receives the first bid, it can look for a higher bidder for the
Phase 7: given time period. This provision helps board to fulfil fiduciary responsibility towards the shareholder.
Developing the
Integration Plan • Allocation of price: During the valuation of assets, both the parties must agree to the methodology as
conflicts may arise in valuation of assets (depreciation) and tax reporting procedures.
Phase
Phase 8:
8: • Payment Mechanism: Payment may either be made by wire transfer or cashier's check. Buyer may take
Closing
Closing
precautionary measurement like holding a part of payment for settlement of claims.
Phase 9: • Assumption of Liabilities: The buyer assumes all the known and unknown liabilities of the target firm.
Implementing Post-
closing Integration • Representations and Warranties: They are claims made as "Statement of Facts" by buyers and sellers
Phase 10:
mainly serving three purpose - Disclosure, Termination Rights and Indemnification Right.
Conducting a Post-
closing Evaluation

AYUSH MOHAN SINGH (MBA20125)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
• Covenants: These are the agreement between both the parties to agree or refrain from conducting some
Plan business. It can be both restrictive and progressive in nature.
Phase 3: • Closing Conditions: The Satisfaction of negotiated conditions determines whether a party to the agreement
The Search
Process
must consummate the deal
Phase 4: • Indemnification: In the event of breach of warranties and covenants the seller requires to absolve the
The Screening buyer of the liability created. This clause is bounded by the time period and both parties try to limit it.
Process
• Financing Contingencies: This clause restricts buyer to make the deal if he cannot obtain adequate source
Phase 5: of funding. The seller may also ask buyer to deposit certain fee in the escrow to protect his interest.
First Contact
• Use of AI and technology:  Deal attorney are now using advance technology containing best practices and
Phase 6: expert opinion to draft M&A contract.
Negotiation

Phase 7:
Developing the
Integration Plan

Phase
Phase 8:
8:
Closing
Closing

Phase 9:
Implementing Post-
closing Integration

Phase 10:
Conducting a Post-
closing Evaluation

AYUSH MOHAN SINGH (MBA20125)

Phase 9
IMPLEMENTING POST-CLOSING INTEGRATION
Phase 1: Building
the Business
Plan/Model

Phase 2: M&A The post-closing integration activity the important phase of  M&A.  Under it comes the 5 important categories:
Implementation
Plan 1. Communication Plans: Effective communication plan immediately after the closing is crucial for retaining
Phase 3: employees. Employees must be aware of the changes caused due to new leadership into the domains
The Search concerning employees such as salary break-ups Similarly, customers and vendors also need to be addressed
Process
by the new management. Best method for such communication is face to face from managers of the
Phase 4: acquiring firm.
The Screening
Process
2. Employee Retention: To retain mid-level employees of the target firm is among the top priority of the
Phase 5: acquiring firm. At times this is an important condition of the deal and target firm have to look for alternate
First Contact methods to ensure the same
Phase 6: 3. Satisfying Cash Flow requirement: Change is ownership leads to disruptions in many sectors of the target
Negotiation
company (manufacturing, Customer loss, vendors etc.) To ensure that the cash flow is not disrupted abruptly
Phase 7: conversation and smooth transition is very important.
Developing the
Integration Plan 4. Employing "Best Practices“: The combined firms often realize potential synergies by employing the best
Phase 8:
practices in the acquired firm.
Closing
5. Cultural Issues: Corporate culture is now an important aspect for the employees and after M&A it is prone
Phase
Phase 9:
9: to change. The acquirer has to make sure that the transition is smooth, and the culture is inclusive in nature
Implementing
Implementing
Post-Closing
for the acquired firm employees.
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

AYUSH MOHAN SINGH (MBA20125)

Phase 1: Building
the Business
Plan/Model POST-CLOSING INTEGRATION 
Phase 2: M&A
Implementation
Plan
THE DEGREE OF INTEGRATION VARIES BY TYPE OF ACQUIRER AND DEAL 
Phase 3:
The Search
Process
Financial buyers:
• Those who buy a business for eventual resale—tend not to integrate the acquired business into another entity, at
Phase 4:
The Screening least not in a significant way. 
Process • Rather than manage the business, they are inclined to monitor the effectiveness of current management and
Phase 5:
intervene only if there is a significant and sustained deviation between actual and projected performance. 
First Contact • Sometimes, financial buyers will “roll up” a fragmented industry by buying a firm within the industry and
subsequently use it as a platform for acquiring additional businesses. Successive acquisitions are integrated into the
Phase 6:
Negotiation
initial acquisition in an effort to gain market share, improve cost positions, and eventually higher financial returns.
In either case -- whether the financial buyer manages the acquired firm as a standalone operation or uses it to
Phase 7: consolidate an industry--the objective is the same. Take the business public through an initial public offering, sell to
Developing the
Integration Plan a strategic buyer, or sell to another financial buyer. 
Phase 8:
Closing Strategic buyers :
• They want to make a profit by managing the acquired business for an extended period.
Phase
Phase 9:
9:
Implementing
Implementing • How they manage the business post-merger can range from operating the target as a separate subsidiary to partially
Post-Closing
Post-Closing or wholly integrating the acquired business into the parent.
Integration
Integration
• Partial or complete integration of the target into the acquirer often reflects the desire to realize rapidly synergy to
Phase 10:
Conducting a Post-
earn back any premium paid for the target. 
closing Evaluation

RANAJIT ROUT (MBA20096)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation THE ROLE OF INTEGRATION IN
SUCCESSFUL ACQUISITIONS 
Plan
Phase 3:
The Search
Process

Phase 4:
The Screening
Realizing projected financial returns:
Process

Phase 5:
First Contact • Suppose a firm’s current market value of $100 million accurately reflects the firm’s future cash flows
discounted at its cost of capital 
Phase 6: • Assume an acquirer is willing to pay a $25 million premium for this firm over its current share price,
Negotiation
believing it can recover the premium by realizing cost savings resulting from integrating the two firms. 
Phase 7: • The amount of cash the acquirer will have to generate to recover the premium will increase the longer it
Developing the
Integration Plan takes to integrate the target company. 
• If the cost of capital is 10% and integration is completed by the end of the first year, the acquirer will have
Phase 8:
Closing to earn $27.5 million by the end of the first year to recover the premium plus its cost of capital ($25 + ($25
× 0.10)).
Phase
Phase 9:
9:
Implementing
Implementing • If integration is not completed until the end of the second year, the acquirer will have to earn an
Post-Closing
Post-Closing incremental cash flow of $30.25 million ($27.5 + ($27.5 × 0.10))
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

RANAJIT ROUT (MBA20096)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
The Impact of Employee Turnover 
Phase 3: • There is evidence of increased turnover among management and key employees after
The Search
Process
a corporate takeover. 
Phase 4: • Some loss of managers is intentional as part of an effort to eliminate redundancies,
The Screening overlapping positions, and incompetent managers.
Process

Phase 5:
First Contact

Acquisition-Related Customer Attrition 

Phase 6:
Negotiation • During normal operations, a business can expect a certain level of churn in its
Phase 7:
customer list.
Developing the
Integration Plan
• Depending on the industry, normal churn as a result of competitive conditions can be
anywhere from 20% to 40%. 
Phase 8:
Closing

Phase
Phase 9:
9:
Implementing
Implementing
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

RANAJIT ROUT (MBA20096)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Phase 3:
The Search
Process

Phase 4:
The Screening
Process

Phase 5:
First Contact
Integration is a process, not an event. 
Phase 6:
Negotiation

Phase 7:
Developing the
Integration Plan

Phase 8:
Closing

Phase
Phase 9:
9:
Implementing
Implementing
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

SAKSHI VERMA (MBA20101)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan PREMERGER INTEGRATION PLANNING
Phase 3:
The Search
Process

Phase 4:
The Screening • During this period, the acquirer is accumulating information about the target that is
Process
generally not available publicly
Phase 5: • Helps to make accurate assessments of potential synergy, a timeline to realize it, and
First Contact
the approximate cost of post-merger integration
Phase 6: • Enables the acquiring company to refine its original estimate of the value of the
Negotiation
target company and due diligence
Phase 7:
Developing the
• Gives the buyer an opportunity to insert warranties and conditions of closing that
Integration Plan facilitate the post-merger integration process
Phase 8:
Closing

Phase
Phase 9:
9:
Implementing
Implementing
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

SAKSHI VERMA (MBA20101)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
THE POST-MERGER INTEGRATION ORGANIZATION
Phase 3:
The Search
Process

Phase 4:
The Screening
Management Integration Team (MIT) is responsible for:
Process
1. Build a master schedule of who will do what and by when
Phase 5:
First Contact
2. Determine the required economic performance for the combined entity 
Phase 6:
Negotiation
3. Combine functions and business units (job design and staffing levels)
Phase 7: 4. Focus the organization on meeting operational performance targets
Developing the
Integration Plan
5. Create an early warning system consisting of performance indicators
Phase 8:
Closing 6. Monitor and expedite key decisions 
Phase
Phase 9:
9:
Implementing
Implementing
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

SAKSHI VERMA (MBA20101)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Phase 3:
MIT must establish a communication campaign
The Search
Process

Phase 4:
The Screening
Process
• Employees: are interested in knowing how merger will affect them, in terms of job
security, working conditions, and compensation
Phase 5:
First Contact • Customers: want the new firm to commit that it will maintain or improve product
quality, timely delivery, and service
Phase 6:
Negotiation • Suppliers: seek long-term relationships rather than the new firm simply looking for
ways to reduce costs
Phase 7:
Developing the • Investors: want the new firm to present a compelling vision of the future so they
Integration Plan
remain loyal
Phase 8:
Closing

Phase
Phase 9:
9:
Implementing
Implementing
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

SAKSHI VERMA (MBA20101)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan CREATING A NEW ORGANIZATION
Phase 3:
The Search
Process

Phase 4:
The Screening • Personnel requirement: Functional requirements have to be assessed in order to design
Process an organizational structure.
Phase 5: • Employee availability: Skills have to documented to fit current and future requirements
First Contact
and new hires have to be made if necessary.
Phase 6: • Staffing plans: Needs and resources have to be analyzed and contingency plans have to
Negotiation
be made.
Phase 7: • Compensation plans: Disparities have to be integrated and clear structure has to be
Developing the
Integration Plan established.
Phase 8: • Personnel information system: Employee databases of both firms have to be merged to
Closing create a single database.
Phase
Phase 9:
9:
Implementing
Implementing
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

SAKSHI VERMA (MBA20101)

Phase 1: Building

FUNCTIONAL INTEGRATION
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Phase 3:
• Revalidating Due Diligence Data: Pressure exerted by both buyer and seller to complete the
The Search transaction often results in undiscovered risks and opportunities like whether intellectual property
Process
has been properly protected, proper evaluation of receivables and physical inventory is done or
Phase 4: not.
The Screening
Process • Benchmarking Performance: Benchmarking target manufacturing and IT operations is a useful
Phase 5:
starting point for determining how to integrate these activities. These can be set as per
First Contact international standards for quality assurance in design, development, production, installation, and
servicing.
Phase 6:
Negotiation
• Reset Synergy Expectations: Additional value is often realized by making fundamental
operational changes or from providing customers with new products or services that were
Phase 7:
Developing the
envisioned during the due diligence process.
Integration Plan • Integrating functions and business alliance: Integration of manufacturing operations,
Phase 8:
information technology, finance, sales, marketing, purchasing, research and development, human
Closing resources, and policies and values, of both firms is crucial for success.
Phase
Phase 9:
9: • Building a New Corporate Culture: Identifying cultural issues through cultural profiling, and
Implementing
Implementing overcoming cultural differences is important for coordination and smooth flow of business.
Post-Closing
Post-Closing
Integration
Integration
Phase 10:
Conducting a Post-
closing Evaluation

SAKSHI VERMA (MBA20101)

Phase 10
CONDUCTING A POST-CLOSING EVALUATION
Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
Implementation
Plan
Phase 3:
The Search
Reason: 
Process • To determine if acquisition is meeting expectations 
Phase 4:
The Screening • To Undertake Corrective actions if necessary 
Process
• Identify what was done well and what should be done better in future deals 
Phase 5:
First Contact

Phase 6: Do not Change Performance Benchmarks: 

Negotiation
• The performance after the acquisition Should be evaluated in comparison to the
Phase 7: actually planned benchmark. 
Developing the
Integration Plan • To justify the acquisition Manager should not accept any lower performance. 
Phase 8:
Closing

Phase 9:
Implementing Post-
closing Integration

Phase
Phase 10:
10:
Conducting
Conducting aa
Post-closing
Post-closing
Evaluation
Evaluation

RANAJIT ROUT (MBA20096)

Phase 1: Building
the Business
Plan/Model

Phase 2: M&A
WHAT QUESTIONS SHOULD BE ASKED? 
Implementation
Plan
After 12months time-period: 
Phase 3:
The Search • What has the buyer learned about the business?
Process
• Were the original Valuation Assumptions Reasonable?
Phase 4:
The Screening • If not, what did the buyer not understand about the target company, and why?
Process
• What did the buyer do well?
Phase 5:
First Contact • What should have been done differently?
• What can be done to ensure that the same mistakes are not made in future acquisitions?
Phase 6:
Negotiation
After 24 months, is the business meeting expectations? 
Phase 7: • If not, what can be done to put the business back on track?
Developing the
Integration Plan • Is the cost of fixing the business offset by expected returns?
Phase 8: • Are the right people in place to manage the business for the long term?
Closing
After 36 months 
Phase 9:
Implementing Post- • Does the acquired business still appear attractive? 
closing Integration
• If not, should it be divested? 
Phase
Phase 10:
10:
Conducting
Conducting aa • If yes, when should it be sold and to whom?
Post-closing
Post-closing
Evaluation
Evaluation

RANAJIT ROUT (MBA20096)

Phase 1: Building
the Business
Plan/Model

THE INCREASING APPLICATION OF DATA

Phase 2: M&A
Implementation
Plan
Phase 3: ANALYTICS IN M&A 
The Search
Process

Phase 4:
The Screening
Process • Senior executives often are confronted with vast amounts of data on their customers,
suppliers, employees, etc. 
Phase 5:
First Contact • Executives attempt to use such data to describe, predict and improve business
performance, data analytics can be applied to all phases of the M&A process. 
Phase 6:
Negotiation • The application of data analytics to M&A has increased in acceptance and popularity
Phase 7:
with 40% of 2016 Deloitte & Touche survey respondents viewing data analytics as
Developing the critical to M&A analysis.
Integration Plan
• Larger firms are more inclined to use data analytics with 58% of firms with revenue
Phase 8: exceeding $5 billion viewing data analytics as a core component of M&A analysis.
Closing
• Firms with annual revenue under $500 million showed less interest in such tools.
Phase 9:
Implementing Post-
closing Integration

Phase
Phase 10:
10:
Conducting
Conducting aa
Post-closing
Post-closing
Evaluation
Evaluation

RANAJIT ROUT (MBA20096)

Phase 1: Building
the Business
Plan/Model USE OF DATA ANALYTICS
Phase 2: M&A
Implementation
Plan
• Text reading software can organize the review of legal contracts through key word (or phrase) searches
Phase 3:
The Search
based on names, locations, and dollar amounts. 
Process • A page-by-page review of legal documents, once time consuming, can now be done automatically. 
Phase 4:
The Screening • Another application is in assessing the target firm’s talent pool by identifying the number of employees
Process with certain types of degrees or certifications and length of work experience.
Phase 5: • Comparisons can be made between the target’s and acquirer’s compensation structures to determine
First Contact what changes might have to be made and the potential impact on the combined firm’s cost structure. 
Phase 6:
• Automated natural language processing (i.e., training computers to understand all forms of human
Negotiation communication) can be used to assess the intellectual property of the target firm and to cross-reference
those descriptions of the property with other databases to avoid potential future litigation or regulatory
Phase 7:
Developing the challenges.
Integration Plan

Phase 8:
Closing Limitations:
Phase 9: • It is not always clear that the patterns are not simply an anomaly or whether they are significant and
Implementing Post-
closing Integration
sustainable over time.
Phase
Phase 10:
10:
• Furthermore, the management of the target firm is likely to balk at handing over voluminous data during
Conducting
Conducting aa due diligence.
Post-closing
Post-closing
Evaluation
Evaluation

RANAJIT ROUT (MBA20096)

Thank you!