Introduction

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Part II views mergers and acquisitions not as business strategies but rather as a means of implementing business strategies. Business strategies define a firm's vision and long-term objectives and how it expects to achieve these ends. M&As simply represent one means of implementing the business strategy. The firm may choose from a range of reasonable alternative implementation strategies, including “going it alone” or partnering, or by acquiring another firm.

Chapters 4 through 6 discuss the various activities often undertaken in a merger or acquisition. These activities comprise the ten phases of an M&A process. While not all mergers and acquisitions unfold in exactly the same way, the process outlined in this section serves as a road map for executing such transactions. The process is sufficiently flexible to be applicable to alternatives to M&As such as business alliances, which are discussed in Chapter 14.

Chapter 4 focuses on how to develop a business plan or strategy and, if an acquisition is viewed as the best way of realizing the business strategy, how to develop an acquisition plan. Chapter 5 deals with identifying, making initial contact with the potential target, and developing the necessary legal documents prior to beginning due diligence and formal negotiations. While initial valuations provide a starting point, the actual purchase price is determined during the negotiation period. If agreement can be reached, planning the integration of the target firm begins between the signing of the purchase agreement and the closing. The motivation for each phase of the process is discussed in detail. Chapter 6 discusses common obstacles arising during the postclosing integration effort and how to deal successfully with such challenges.