Free Mergers and Acquisitions For Dummies by Bill Snow

cobble together multiple companies into one integrated firm. This setup is perfectly fine, and PE firms often do a wonderful job of integrating, but you need to be wary of just how well organized formerly disparate companies have been integrated.
    How long has an integrated company been operating (since the last acquisition)? If the acquired company is actually a group of formerly independent companies, don’t make an acquisition too quickly. Waiting awhile (at least a year) to make sure these formerly independent companies are operating as a cohesive unit is a good idea.

Chapter 3
    Previewing the Generally Accepted M&A Process
    In This Chapter
    Walking through a typical M&A deal
    Discovering the difference between an auction and a negotiated transaction
    Looking at both Buyer’s and Seller’s position
    Keeping tabs on who has power
    A lthough the truism “always be prepared” applies to just about everything in life, it’s especially true in mergers and acquisitions. To the uninitiated, the world of M&A may seem to be a Wild West of sorts: chaotic, bizarre, and full of strange nomenclature and acronyms. But believe it or not, the buying and selling of companies has a clearly defined process. To be a successful Buyer or Seller, you need to understand how that process works so that you can think many steps ahead and plan accordingly — just like a chess game, but without the checkered board.
    In this chapter, I break down the phases involved in a typical M&A deal as well as define the two methods of selling a business: auction and negotiation. I also look at the constantly changing power balance between Buyer and Seller in a deal and provide suggestions on preserving as much power as possible in less-than-ideal circumstances.
    Take Note! The M&A Process in a Nutshell
    You don’t wake up one morning and suddenly decide you want to buy or sell a business. A good deal of planning occurs before Buyer or Seller can undertake the process of buying or selling a business, let alone successfully close a deal.
    The number of steps in the M&A process may vary depending on the type of deal you’re negotiating (a quick auction versus a drawn-out negotiated sale, for example), but overall the process more or less remains the same. That’s why being well versed in the generally accepted steps in the following sections is so important. M&A professionals have honed these steps over the years, and each step has a specific purpose.
    The process to buy or sell a company isn’t as linear as you may think, and it often takes longer and costs more than you expect. These steps aren’t carved in stone, nor are they the be-all and end-all. Don’t become rigid in your approach to doing deals; feel free to riff on these steps and write your own variations on a theme. The key points are to disseminate information in a timely, orderly, and appropriate manner and to close mutually beneficial deals.
    To keep the process moving along, Seller needs to create a line in the sand by instilling due dates. The first due date will be for indications of interest. Buyers will almost always be late in submitting their indications, so Sellers are wise to allow for a little padding of time.
    Step 1: Compile a target list
    If ownership decides to sell or make acquisitions following discussions with advisors, family, friends, and management, the process begins by identifying prospective Buyers or Sellers. The key word here is prospective; these businesses may or may not be interested in doing a deal. You begin to make that determination in the following steps. Chapter 6 provides a much deeper dive into the process of researching, compiling, and culling a list of targets.
    For a successful acquisition or sale campaign, I strongly recommend having at least 75 prospects, and preferably more than 100. Having a small universe of prospects simply lowers the odds of finding the right deal, but a list of many more than 150