Few things in the business sphere can be more time-consuming and stress-inducing than a merger/acquisition. In this short article, we’ll quickly go through nine steps that are meant to facilitate the process. This begins with making sure that your company is actually ready for the sale or acquisition.
- Rectify the Non-Disclosure Agreement: The NDA must be signed by the company with which you plan to merge; make sure that the standard rules are included – such as compelling the company to abstain from trying to recruit any of your employees before the merger or acquisition is concluded. The same rules apply if you’re on the other end.
- Retain an Investment Banker: This happens at the very beginning anyway, since he will be well-positioned to corral a list of prospective buyers for your company. Pore over the engagement letter to spot inequitable language that favors the other side more. You will also benefit from information on the general market.
- Attorneys: Obviously, this is in your best interest – the knowledge of a good attorney dramatically exceeds that of the investment banker on all the legal ramifications of the acquisition or merger. Specifically, get a mergers-acquisition lawyer.
- Negotiating the Merger & Acquisition Terms: With the attorney, investment banker, and your company’s own board, you should delegate the responsibility of certifying the terms to any of these – NOT to the CEO of either company. This is important for a conflict-less solution.
- Send the Letter of Intent: This is exactly what it says – the letter certifies that there’s a grace period of between 1-2 months for all the necessary preparations to be made before the merger/acquisition.
- Shore Up Company Files: This is, basically, preparation for the merger. Generally speaking, most companies that are about to merge or be acquired have incomplete files floating about; these need to be compiled in a storeroom specifically for that purpose. Additionally, a comprehensive Disclosure Schedule should be concocted. Take an accounting of any contracts and leases that may be expiring and need to be renewed or discarded.
- Rectify All Outstanding Employee Issues: This includes retentions, firings, promotions, etc. You will need to handle stock options and how these can be expected to change, which may include accelerating intended payouts, reacquisitions, etc.
- Establish the Deal Terms: This should be easier since you’re this far along in the M&A process. Some of the points of a note may include escrow and indemnification clauses, the conditions under which closure of the deal can be ratified, employee stock options (see above), and others.
- Focus! The M&A is a Long Process: Even under the best of conditions, few activities that a company will ever undergo will be more comprehensive than a merger/acquisition. Don’t lose focus on the objectives, and enumerate the goals to facilitate the completion of the process. For an in-depth dive into what’s required, The Finance Marketing Group has experts that are well-versed in the entire process.