Moving on Up Through Mergers and Acquisitions

mergers and acquisitions approach
Building Competency in Acquisitions-Part 3: The Approach- Basic Principles of the Transaction Execution


Mergers & Acquisitions (M&A) Strategy—Author’s note: The activities that lead to the identification and ultimate execution of an opportunity are very intertwined and subject to continuous learning and improvement. With that in mind, I will summarize four main activities in the M&A (mergers and acquisitions) Process Lifecycle over the course of four different articles as follows:




    • Approach (part 3 below)


  • Execution

There are many moving parts when it comes to mergers and acquisitions (M&A). In keeping with that, there are also many individuals and organizations involved in these transactions. They will help keep M&A orderly and on track.

Transaction Sponsorship

Every acquisition or investment opportunity must have a Transaction Sponsor, who is the business person(s) responsible for ensuring the delivery of the key financial and other success metrics. Because the Transaction Sponsor has the ultimate responsibility for the successful execution of the transaction, he or she must be deeply familiar with all aspects of the acquisition or investment strategy and its operational elements. The Transaction Sponsor will be provided all the information and analysis by the appropriate teams throughout the course of the process, but he or she will ultimately make the formal request for permission to execute the various phases of a transaction.

Fiduciary Roles and Responsibilities

Because of their fiduciary responsibilities to the corporation and the shareholders, as well as the relative complexity of M&A, the following participants are accountable to develop an unbiased analysis and point of view regarding an acquisition or investment thesis brought forward for approval:

Corporate development should—

    • Serve as the primary point of contact and represent the company


    • Oversee and review any information and route appropriately


    • Run the deal and coordinate diligence and other activities


  • Provide an unbiased opinion on the benefits, risks and issues of an acquisition or investment thesis, as well as the corporate point of view of fair market value and affordability based on a neutral analysis of the proposed business case

The M&A deal committee should—

  • Review, opine on and provide approval/denial of any acquisition or investment thesis based on the information provided

The board of directors should—

    • Work with senior management on alignment with corporate strategy and M&A strategy


    • Review and provide feedback prior to submitting an indication of interest (IOI) to the target company


    • Review and provide feedback on final negotiated terms and conditions of an acquisition


Unsolicited Opportunities

In the event of an unsolicited acquisition or investment-related opportunity, most frequently, it will be in the form of a company “teaser” or a Confidential Information Memorandum (CIM). This information packet usually contains a high-level description of the business, investment highlights and summary financials.

Upon receipt of information, the company must review it very carefully. If the acquisition or investment opportunity fits with the corporate M&A strategy, and there is sufficient interest and compatibility, the company then requests confidential information about the company and the process, which likely will require the execution of a non-disclosure agreement (NDA). For the most part, the process involves a management presentation and other information that will allow the company to develop and put forth (or not) a formal IOI.

The timeliness and professionalism of the interactions between the company and the external market are both very important, as it implies knowledge and organization around and M&A agenda and encourages market participants such as investors and investment banks to continue to bring opportunities to the company’s attention.

Steps To Completing a Transaction

Having gone through the initial iterations of the M&A strategy, complemented by initial internal and external sourcing efforts, a company can then set off to engage with and analyze potential targets and potentially see a transaction through to completion, if appropriate. At a high level, the acquisition process can be viewed in two phases:

    • Preparation and Initial Contact—Form the M&A strategy, preparing to engage in an M&A-related dialogue with select potential targets and making initial contact to gage interest.


    • Execution—Moving through the M&A discussions to diligence, planning, final negotiations and integration.



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