Overview
‘Mergers and Acquisitions’ is the term generally used to describe the types of corporate transaction involving 2 or more businesses coming together to form one new business, and these deals run in much the same way regardless of the size of the deal.
Commonly this is achieved by means of one company acquiring another company, either via a share acquisition (the buying company acquires the shares of the target company from its shareholders) or an asset acquisition (the buying company acquires the business and assets of the target company from the company).
In other circumstances, there may be less of a buyer/seller context and more of a joint exercise of bringing 2 (or more) companies together. Again this can be structured in a number of ways including by means of transfers of shares or assets.
Who is involved?
There are a number of parties who are generally involved in getting a deal done (and we are referring here to private company deals rather than deals done between listed companies, where the deal structures are different).
For private company deals, the cast of relevant parties generally involves some or all of the following, as well as the buyer and seller:
Solicitor
The role of the solicitor, whether on the buy-side or sell-side of a transaction, is to document and negotiate the legal terms of the deal from start to finish. As such, the law firm is generally introduced towards the beginning of the process and take responsibility for delivery of the deal, in tandem with the CF advisor/accountant.
Corporate Finance adviser
A corporate finance (‘CF’) adviser is (generally-speaking) an accountant that specialises in corporate transactions. Sometimes badged as a standalone CF business, or sometimes comprised of 1 or more individuals within a specialist team at a firm of accountants, the CF adviser can fulfil a number of roles, according to the circumstances. These can include:
- Marketing a business for sale and sourcing a buyer
- Negotiating a deal at high level between buyer and seller
- Project-managing a deal to completion
- Liaising with other professional service providers
Accountant and tax adviser
In a role which can overlap into (and in some cases replace) that of the CF advisor, a buyer or seller will engage their accountants and tax advisors to review financial and tax aspects of the deal structure and how they will be affected.
What are the steps to getting a deal done?
In broad terms, the steps to a successful M&A deal require the following:
- an investigation process into the target business
- the agreement of the high-level deal structure
- the engagement of advisors
- an organised and proactive deal process
- commerciality on all sides
All of the advisers need to be part of delivery of this.
Please take a look at some of our other Q&As covering other aspects of the Corporate process, for some more colour around the detailed process to achieving a successful transaction.
