3. Acquisition Process

3. Acquisition Process

1. M&A process

   • Business plan
     • Acquisition plan
       • - Quantifiable and businessplan supportive
       • Search
         • Screen
           • First contact
             • Negotiation
               • Integration plan
                 • Closing
                   • Integration
                     • Evaluation
                       • Differ from expectation
                         • Corrective actions
                           • Learn from mistakes
                             • Steady becnhmark
                     • Communication plans
                       • - Employees - Costumers - Suppliers - Investors - Communities
                       • Employee retention
                         • Cash flow issues
                           • Culutral issues
                             • Size Industry Geography
                             • Shared goals, shared standards, shared services
                   • Consent
                     • From all parties
                     • Definite agreement
                       • Price
                         • Allocation
                           • Tangible assets
                           • Assumption of liabilites
                             • Peps and warranties
                               • Covenants
                                 • Closing conditions
                                   • Indemnification
                                     • How employe will be paid
                 • Determine events to realise synergies
                   • Rapid integration reach synergies sooner
                     • Minimize emplyee turnover and customer reduction
                       • Emperical findings: Lose 5 -10 % of costumers
                 • Integrating mechanism
                   • Team work
                   • Parties to alliance in resource
                     • Consensus decision making
                 • Include management
               • Final pruch. price
                 • Refining valuation
                   • Deal structuring
                     • Due dilligence
                       • Financing plan
                         • Negotiations on covenants, and how borrowd funds are used
                           • Obtaining bridge financing
                             • Conducting road show
                       • Validate valuation assumption,
                         • Identify value creation/destroyers
                       • Buyer, seller, lenders
             • Objective
               • - Relationship and trust if time allows
               • Direct intermediate
                 • Strategy
                   • - Size - Public or private - Time
                   • Preliminary legal document
                     • - Confidentiality: Mutual Binding - Term sheet: Range price, no-shop privision (seller dont go to other parties), - LOI: Major terms and conditions, Protective provisions,        -- Not always wanted        -- May delay the process
           • Increase selection criteria
             • Market share
               • Profitability
                 • Degree of leverage
         • Primary selection criteria
           • Strategy
       • Timetable
         • Resource capacity
           • Management preference
             • Search plan
               • Negotiation strategy
                 • Initial offer
                   • Financing plan
                     • Integration
     • External
       • - Five forces: Costumers, suppleirs, current competors, potential competitors, and product substitutes.
       • Internal
         • - Compared with other firms
         • Vision
           • Objectives
             • Business strategy
               • Price cost leadership Product differentiation Focus or niche Hybrid
               • Implmentation Strategy
                 • Linking to acquisition plan