M&A process Flashcards
What defines an M&A transaction in technical terms?
A transfer of control and beneficial ownership of a company from one subject (seller) to another (buyer), which may include private or public companies.
In M&A, who are the typical players involved?
Bidder (buyer), Target (company being acquired), and Seller(s) (current owners).
What’s the key difference between strategic and financial M&A buyers?
Strategic buyers seek operational synergies or market expansion, while financial buyers (PE, HF) aim for targeted financial return.
Why is M&A not a regression?
Because outcomes aren’t statistically estimated — transaction terms and valuations are negotiated and context-specific.
What are the four core objectives of the M&A process?
- Ensure both parties have proper information for decision-making
- Justify commitment of time/resources
- Allocate deal risks effectively
- Maximize competition (especially for sell-side)
Why is M&A considered “non-recurring” and complex?
Because it’s a rare, life-changing corporate event, demanding expertise not usually developed internally.
What are the three types of transaction structures?
A. Private Negotiation
B. Competitive Auction
C. Public Tender Offer (OPA/PTO)
What is the purpose of the NDA in M&A?
To protect the confidentiality of shared sensitive information between parties and advisors.
What’s the role of the Information Memorandum (IM)?
To provide a detailed overview of the target to potential buyers — it’s used to market the company.
Why is the SPA not just a formality?
It governs the actual legal transfer of ownership and allocates liabilities and reps/warranties between buyer and seller.
What is the critical purpose of the due diligence process?
To confirm assumptions, validate valuation, and uncover risks that affect price and feasibility of the deal.
What are the five main focus areas in M&A due diligence?
Financial, Commercial, Legal, Tax, Environmental
What methods are typically used in due diligence?
Data room review, Management presentations, Site visits, Q&A sessions, Expert sessions
Why is financial DD not just about the balance sheet?
Because it’s about validating the business model, risks, synergies, and projections — not just historicals.
What’s the difference between “understanding” and “liking” a business in M&A?
Understanding means assessing risk, scalability, and strategy. Liking can cloud judgment — you don’t have to like it to value it.
What’s the danger in misinterpreting understanding with appreciation?
You may overpay or overlook strategic misfits due to emotional bias or branding affinity.
What made illycaffè a unique M&A case?
It was a minority stake sale aimed at global expansion while maintaining family governance and cultural values.
Why was expansion in the US so critical for Illy?
US was a key growth market; needed a distribution partner and capital without giving up control.
What were Illycaffè’s main goals in the minority stake sale?
- Shareholding reorganization
- Cultural fit with family governance
- US growth & distribution
- Confidentiality
- Precise timing execution
What was the goal of the short-form teaser in Phase I?
To assess preliminary interest from a wide range of investors while controlling info flow.
What key documents were released in Phase II?
Draft SPA, DD packages (financial, legal, commercial), Governance term sheet
Why was governance a key filter in the illy deal?
Because the family sought to retain cultural identity and avoid a misaligned partner.
Why is alignment with the client’s management crucial before launching a process?
It ensures internal consistency and avoids derailment mid-process due to conflicting expectations.
