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M&A > M&A Acquisition Process > Flashcards

M&A Acquisition Process Flashcards

1
Q

What is a Business Plan?

A

Articulates a mission or vision for the company

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2
Q

What is a Business Strategy?

A

Lays out how to realize the mission for all firm’s stakeholders over the long-term

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3
Q

What does the implementation strategy discuss?

A

How to more specifically execute the business strategy

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4
Q

What is the M&A Plan

A

A type on implementation strategy that shows the motivation for the acquisition and when its achieved

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5
Q

Functional Strategies

A

Describes in detail how each major function in a firm supports the business strategy

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6
Q

Contingency Plans

A

Alternative plans to the current firms Business strategy, contingent on trigger points

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7
Q

What is the 10 phase process

A
  1. Business Plan
  2. Acquisition Plan
  3. Search
  4. Screen
  5. First Contract
  6. Negotiate
  7. Integration plan
  8. Closing
  9. Post-closing Integration
  10. Evaluation
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8
Q

Negotiation

A

crucial phase of the M&A process

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9
Q

Closing

A

involves gaining all the necessary regulatory and financing approvals

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10
Q

Post closing Integration

A

a key phase where the integration plan is implemented, important to realize all the assumptions used when make the purchase decision

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11
Q

External Analysis

A

How the firm can compete within its chosen markets

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12
Q

Internal analysis

A

Self-assessment of the firms Strengths and Weaknesses relative to competition

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13
Q

Mission statement

A

Summarizes where and how a firm chooses to compete based on values, beliefs, and SWOT

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14
Q

Set Objectives

A

Quantifies what perfomance measures

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15
Q

Business Strategies

A

Defines how the business intends to compete

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16
Q

Implementation Strategy

A

How the firm puts the Business Strategy into practice

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17
Q

Functional Strategies

A

Clearly defines roles/responsibilities are required resources to support each functional area of the business strategy in the short-term

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18
Q

Strategic Controls

A

Monitor actual performance, implement incentive systems

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19
Q

Implementation process has these 5 components: (OPIAS)

A

Organic growth (internal resources)
Partner with other firms
Invest in other firms
Acquire another firm
Swap assets with a firm

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20
Q

Acquisition plan

A

Focuses on short term tactical issues vs long term strategic issues (search criteria, resource assessment, market analysis)

21
Q

Search Process Step 1

A

Establish a small number of primary selection criteria; industry, size of transaction, geographic area

22
Q

Search process step 2

A

search databases and corporate registries for targets using the selection criteria

23
Q

Search is performed by?

A

Investment bank

24
Q

Screening

A

a refinement of the initial search process using secondary search criteria

25
Q

First contact

A

keep a profile of each possible target and reasons why they might consider a proposal

26
Q

First Contact - Put into play

A

rumors circulate that there is buying interest on a company- other firms become interested

27
Q

First Contact - Discussing Value

A

Value is initially discussed in a range using multiple valuation techniques, valuation multiple

28
Q

First Contact - Preliminary Legal Documents

A

If target firm is open to a friendly deal, parties negotiate Confidentiality agreement or LOI

29
Q

First contact - Confidentiality Agreement

A

Mutually binding, both companies share non-public data

30
Q

LOI

A

Includes responsibilities of both parties with expiration date and terms and conditions

31
Q

LOI - No shop

A

prevents the seller firm discussing price with other buyers to avoid competitive process

32
Q

Negotiation

A

Most complex aspect of the acquisition process

33
Q

Negotiation - Due Dilligence

A

reviewing legal documents to “know what you’re buying”

34
Q

Negotiation - Refining Valuation

A

Years of historical financial data should be adjusted for any non-recurring items or gains

35
Q

Negotiation - Total Consideration

A

The payment to shareholders which consists of cash, stock, or both

36
Q

Negotiation - Net Debt

A

the market value of target’s debt, less cash and securities on balance sheet

37
Q

Total Purchase Price / EV

A

Represents the total investment made by acquiring firm

38
Q

Negotiation - Net Purchase Price

A

Total purchase price + other assumed liabilities - sale of assets

39
Q

Integration Plan - Choosing the integration manager

A

The buyer/Acquirer will designate an integration manager with good people and project skills

40
Q

Integration Manager Will

A

Identify and figure out how to retain key managers, vendors and customers

41
Q

Closing involves (1)

A

Completing the Definitive Merger Agreement or Plan of Agreement

42
Q

Closing Involves (2)

A

Obtaining all necessary SH, Regulatory approvals and Third-party consents

43
Q

DMA

A

The cornerstone of closing documents, indicates all rights and obligations of the parties both before and after the closing

44
Q

Post-Closing Integration

A

Most important phases in the acquisition process

45
Q

5 Categories important to post-closing Integration (CESEC)

A
  1. Communication Plans
  2. Employee Retention
  3. Satisfying Cash Flow requirements
  4. Employee Best Practices
  5. Cultural Issues
46
Q

post-closing Integration- Communication Plans

A

Crucial to keeping employees, maintaining morale, and productivity

47
Q

Post closing Integration - Employee Retention

A

Maintaining managers should be a top priority

48
Q

Evaluation

A

ensures the acquisition is meeting expectations

49
Q
A

M&A (4 decks)

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