business plan m&a

How to Put Together a Business Plan for an Acquisition

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

What is Acquisition Planning?

Acquisition planning is when the acquirer identifies and builds relationships with potential targets. More specifically, these targets meet the acquirer’s predetermined, strategic criteria.

‍ The strategy behind acquisition planning leads to stronger outcomes for both sides of the deal and must, therefore, be the foundation of acquisition plans.

Acquisition plan templates often include a summary of this overarching strategy, criteria for potential targets, a list of potential targets, timelines, risk management and due diligence materials, as well as integration planning materials.

We at DealRoom work with many companies helping them organize their M&A process . So let's start with the overview.

How to create an acquisition plan

One of the principal errors that many M&A practitioners make before making an acquisition is not putting together a business plan. The business plan is an invaluable asset when planning M&A.

It creates a roadmap for what you’re looking for from a business acquisition, as well as providing reassurance to those funding the deal that the rationale behind it is solid and that the decision to acquire is not being made on a whim.

The format of the business plan for an acquisition has a similar structure to that of a business plan for a startup and includes many of the same sections.

When writing either of these documents, you should be asking yourself ‘does what I’m writing sell the opportunity?’

If the answer to that question is ‘ no ,’ you need a rethink, maybe not just for the document, but perhaps for the acquisition itself.

Having said all that, here’s a typical outline of how a business plan for an acquisition should look:

1. Executive Summary

Even though it comes at the beginning, most how-to guides on business acquisition plans suggest leaving the summary of an acquisition transaction until you’ve written everything else.

While this is pretty sound advice, a good rule of thumb is that, if what you’re proposing is compelling enough, you should have a rough draft of the executive summary in mind before even beginning.

A good executive summary should cover a page and sell the opportunity as best as possible, covering its target market, your strategy and summary financials. This is often the only page that investors read before skipping to the financial projections, so make sure it’s strong.

2. Target Description

This section of acquisition plan outlines the business you’re acquiring and why it’s worth what you’re proposing to pay for it. Be as thorough as possible here. If there are weaknesses that you see in the business, introduce them and talk about how you can iron them out and generate value.

At a minimum, include details such as

• headline financials
• a breakdown of the company’s long-term assets (factory, head office, facilities, stores, etc.) and liabilities
• a SWOT analysis
• corporate structure.

If the company operates in a different segment to your own, show how you can make this work in your favor.

3. Market Overview

A common error when looking at the market overview is to think globally.

Startup investor Peter Thiel refers to this, whimsically noting that someone owning a restaurant could say that they’re entering a trillion dollar industry, when in reality, their market is a five mile radius around the location of the restaurant.

The more granular the detail here, the better.

• How many customers does the target have, and what kind of customers are they?
• Will you lose their business if the current owner moves on?
• What kind of demand is there for the business outside of its current customer base?

4. Sales and Marketing

This section provides an overview of the sales for each of the target’s products and services. It should show their pricing strategy and how it compares to your own, and how the company currently conducts its marketing.

For example, if it uses mailing lists to contact customers, is that something you could leverage for your own products and services?

Or perhaps you feel it’s not investing enough in marketing and that you could increase sales by investing in this area. In either case, outline the ‘quick wins’ that you can exploit here after acquiring the business.

5. Financial History and Projections

When looking for financing for an acquisition, this section is the one which will make or break the deal. Thus, you should be as thorough as possible here, analyzing the target’s past financial performance.

At a minimum, this should involve three years of financial statements and tax returns but five or more is even better.

The analysis should be comprehensive and honest. It should raise issues that may conflict with your own business - for example, different credit arrangements with customers or a significant difference in capital structure.

Once this has been completed, you can look at projections for the business. These projections should tie in everything you’ve written until now; if you plan to increase sales and marketing, this should show in the income statement; if you’re going to use income from the acquired business to pay down debt, this also needs to be accounted for.

There is no right answer for how much your growth projections should be, but it should be justified by the vision that you’ve laid out until now.

An interesting, if potentially complex, sub-section to add to the financial analysis are the gains from synergies and losses from cannibalism that you see emerging from the deal.

Synergies might come from cutting some admin or sales staff or merging sales channels (for example, online or direct mail) after the acquisition.

Cannibalism arises when you’ve got one of your sales reps selling the new, wider product range, and the customer ends up choosing the target’s product over your own.

It’s easy to fall into the proverbial rabbit hole with this section, but it’s still a useful exercise to make you think about where gains (and losses) will be made from the acquisition.

6. Transition Plan

This is typically a brief section that shows how the business will move from the control of the current owners to your own. This is not purely about ownership, however.

It should also detail how current sales relationships, contracts, and intellectual property are dealt with in the transition.

You can minimize the disruptive influence of the acquisition by getting this section right. If there are complex processes at the target company, know who performs them and how this will be dealt with.

Thousands of acquisitions are botched every year by undervaluing seemingly small processes which generate value right across the business.

7. Deal Structure

The topic of deal structure has been covered well elsewhere [link], and these articles can be of assistance when adding this section.

Having put together a failsafe case for acquiring the target company, now you show the financial structure you will use to do so.  

8. Appendices/Supporting Documents

A major difference between writing a business plan for a startup and one for a business acquisition is the variety of supporting documents attached.

At a minimum, this should include copies of tax returns and licenses, but could go into greater depth and show contracts with large customers, auditors’ letters and any other legal documents deemed relevant.

Using a merger and acquisition proposal sample can provide helpful guidance when determining which supporting documents to include.

Download acquisition plan/proposal templates

• Business acquisition proposal sample template
• Acquisition strategy sample template (m&a strategy template)
• Business acquisition plan template

While there is room for some variation in sections of each business plan, one thing every plan should have in common is its ability to convince the reader of the merits of the acquisition. Each section should be detailed and compelling.

If you’re not willing to put in the groundwork on a business plan, an investor is entitled to ask, ‘ why should I give a million dollars to someone who can’t write 20 pages? ’

By spending time on the business plan, and taking a critical perspective, you maximize the chances of your acquisition finding a funder, and simultaneously creating a strategy for the acquisition that primes it for success.

Get your M&A process in order. Use DealRoom as a single source of truth and align your team.

Business Acquisition Plan: What to Include in 2024 (+ Template)

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

A business acquisition plan is an important component of planning for an M&A transaction, regardless of whether you require external financing. A solid business acquisition plan should lay out the rationale for the investment, and how it will add value for the entity. In this article, FirmRoom takes a closer look at how these documents should be crafted.

Understanding Business Acquisition Plan

A business acquisition plan is a strategy document, which serves the purpose of a business plan for an M&A transaction.

It outlines the motives behind a transaction, profiles of the companies involved in the transaction, how the transaction will generate value for the entity which is driving it, how the two companies will be integrated, and how the merged company (or simply acquired company in the case of an investment firm acquiring a company) is expected to perform.

Reasons to Have a Business Acquisition Plan

An acquisition plan provides its users with a roadmap to making the transaction a success. Even before the transaction is initiated, it acts as a reminder to the sponsors, what they’re looking for, why they’re looking for it, and how they’re going to ensure that the transaction is a success.

In general terms, the reasons to have a business acquisition plan are:

Strategic alignment

The overriding goal of a business acquisition plan, as the opening text alludes to, is strategic alignment: ensuring that those undertaking the deal, for lack of a better expression, ‘stick to the plan’, around the motives and means for making the deal a success.

Valuation and pricing

The plan should include strategies and methodologies for valuing the target company. It should guide the deal participants on how to determine a fair value for the target, assess synergies, and estimate future financial returns. It also sets a limit on how much the company can extend itself financially for a deal to occur.

Financing and resource allocation

Financing (sources and uses of funds) is just one part of the resource allocation conundrum. The business acquisition plan also outlines the working capital needs, who works where, how expenditures are going to shift, what capital assets are required, and more.

Business Acquisition Plan Template

The insight that FirmRoom has gained from working with hundreds of companies on thousands of transaction, have been collated in a business acquisition plan template.

This provides a detailed roadmap of what should be included in an effective business acquisition plan, ensuring that its users have everything in place for the conclusion of a successful transaction.

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Creating a Business Acquisition Plan Step-by-Step

While developing a business acquisition plan is recommended, having an ineffective acquisition plan is worse than having none at all.

The document has to be watertight, creating no doubt in the reader’s mind about the benefits of an acquisition.

A strong business acquisition plan should make the reader think that it makes far more sense to go ahead with the transaction than for the company to continue in the status quo.

That being said, the following should only be seen as a rough step-by-step guide to putting together a business acquisition plan:

Strategy development

Best practice:

• Identify where the company wants to be in each of the next five years, possibly on a month-by-month basis, and how it plans to get there. See here for example.
• Identify the key performance indicators that need to be tracked to ensure that the company meets these objectives.
• Based on both of the above, ask whether an acquisition is a crucial part of the company achieving those objectives, before moving forward.

Identifying and evaluating target companies

• Understand where the companies that fit into the strategy will be found , and be thorough and objective in the search for them.
• Be realistic about the companies that can be acquired/merged with, including valuations ,  so as not to waste resources for other companies and your own.
• Remember that just because a company is the only one that’s available, it doesn’t mean that a transaction is a good idea.

Due Diligence

• Use technology ; any M&A practitioner that decides against using a sound technology platform for due diligence is doomed to failure.
• Adopt a mindset where due diligence is considered an investment in the acquisition, rather than a cost to your own company;
• Do not fall for the M&A acquirer’s fallacy of ‘we’ve come this far, so we can’t go back.’ If due diligence says the deal isn’t right, it isn’t.
• Begin the post-merger integration phase as soon as the deal begins to look like a realistic possibility (something which DealRoom is designed to cater for).

Deal structure and negotiation

• Leverage the findings of due diligence to create a more informed negotiation process.
• Remember that there will be back and forth with the seller, and they can be reasonably expected to overvalue their asset.
• Consider all market outcomes (i.e. downturns, current value of stock vs. future value, etc.) when creating an offer. Avoid irrational exuberance.

Post merger integration (PMI)

• Keep in mind at all times during the PMI phase that this is where most of the value can be generated and lost in a transaction.
• As mentioned, begin the process as soon as possible. If the transaction is visible on the horizon, you need to start thinking about its integration.
• Don’t write this off as a ‘soft’ or unnecessary part of the transaction - it won’t be soft when it impacts on your income statement.

Common mistakes to avoid when writing a business acquisition plan

Despite plenty of advice to the contrary, enthusiastic CXOs often write acquisition plans which fail to avoid the pitfalls.

These are among the most common:

Putting the acquisition before the strategy

The acquisition is part of the overall strategy, not the other way around. Companies that are approached by others about a deal, and then somehow convince themselves that there is a strong rationale for a deal, fall foul to this backwards logic.

Management hubris

M&A is an area ripe with management hubris (take a glance at Google Scholar at all the academic texts that link the two). That means management hubris inevitably finds its way into business acquisition plans. Avoid it at all costs - it’s a highly costly behavioural pattern for companies of all sizes.

Lack of detail

The business acquisition plan is a strategy document, not a marketing one. That is to say, it should break down in a step-by-step fashion how the deal will generate value. The more detailed the better. “Creating an outstanding organization” is great, but writing it in the business acquisition plan won’t add any value.

Business acquisition plan template

A business acquisition plan is a hugely worthwhile document that all M&A practitioners should write in order to discern the value of a transaction and how that value can be extracted. It is the business plan for an M&A transaction.

Get your free template below to receive guidelines on how to create the document and make it work for your transaction.

Frequently Asked Questions (FAQs)

Successful acquisition starts with a great plan

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The Ultimate Guide to the M&A Process for Buyers and Sellers

By Joe Weller | May 16, 2019

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This is your comprehensive guide to merger and acquisition (M&A) processes, from both the buy and sell sides.

Included on this page, you'll find a step-by-step process for buy side with templates , a step-by-step process for sell side with templates , best practices for executing an M&A deal , and key M&A terminology .

What Is a Merger and Acquisition Process?

The phrase mergers and acquisitions (M&A) refers to the consolidation of multiple business entities and assets through a series of financial transactions. The merger and acquisition process includes all the steps involved in merging or acquiring a company, from start to finish. This includes all planning, research, due diligence, closing, and implementation activities, which we will discuss in depth in this article.  

Important Terms to Understand in the M&A Process

In order to understand the key steps involved in a successful merger and acquisition, you must first learn the following key terms:

• Merger: In business, a merger is an agreement between two companies to consolidate functions and assets, then continue as one united company.
• Acquisition: In contrast to a merger, an acquisition occurs when one company purchases another company and its assets.
• Acquired Company: Also called the target company , this is the company that is purchased by another.
• Acquiring Company: This is the company that purchases another company.
• Friendly vs. Hostile Acquisition: In a friendly acquisition, the acquiring company purchases another company with the approval of the target company’s shareholders and board of directors. In a hostile acquisition, the acquiring company makes an offer directly to the shareholders without involving the target company’s board. (This is also called a tender offer .)
• Conglomeration: This is a merger between companies that are completely unrelated in the market (i.e., they have no ties to each other in terms of products or services).
• Leveraged Buyout (LBO): This is an acquisition in which the acquiring company purchases the target company using a large amount of borrowed money.
• Statutory Merger vs. Statutory Consolidation: In a statutory merger, one of the merging companies remains in existence as a legal entity. In a statutory consolidation, both merging companies cease to exist legally and instead form a new, combined entity.
• Forward Merger: This is the most straightforward deal, in which the target company becomes part of the acquiring company and ceases to exist as an independent entity.
• Triangular Merger: A triangular merger involves a third party (typically a subsidiary of the buyer). In a forward triangular merger , the target company becomes part of the subsidiary company; in a reverse triangular merger , the subsidiary becomes part of the target company, and this new entity continues as a new subsidiary under the parent buyer.
• Market-Extension vs. Product-Extension Merger: A market-extension merger takes place between companies that deal in similar products but different markets, whereas a product-extension merger occurs between companies that offer similar products and occupy similar markets. In both cases, the object of the merger is to grow the customer base.
• Joint Venture (JV): This is a partnership between two or more business entities, usually for the sake of executing a particular project. A joint venture can be formal or informal. In a formal JV, the involved entities often create a separate business entity for the partnership, to which they contribute assets and in which they all have equity that they manage.
• Asset vs. Stock Deal: In an asset sale, the acquirer purchases the target company’s assets (knowledge, customer lists, inventory, resources, equipment, etc.), but the target company remains the legal owner. In a stock deal, the buyer purchases the target company’s stock and assumes ownership of all its current assets and liabilities.
• Share Exchanges: Also called a stock swap , a share exchange occurs when some of the target company’s shares are exchanged for some of the buyer’s shares in a merger or acquisition. Both companies’ stocks must be valued beforehand to ensure an accurate swap ratio.
• Discounted Cash Flow (DCF): In this valuation model, you estimate future cash flows using a discounted rate that allows you to make projections about a company’s monetary worth.

The Importance of Synergy

In M&A, synergy refers to the potential financial benefit that results from combining two business entities. A merger or acquisition is only worthwhile if the projected value and performance of the joined entities is greater than the sum of its individual parts.

Because synergy is often the driving force behind a merger or acquisition, evaluating synergy is crucial. There are several ways to do this (which we explain later on), but in short, you should calculate both hard synergies (cost savings) and soft synergies (revenue increases).

Motivations and Considerations for an M&A Deal

Companies choose to pursue a merger or acquisition for a variety of reasons — most commonly to achieve economies of scope or scale, to diversify, to transfer resources, or to cross-sell a different product or service to an existing customer. Other motivations include uniting common products (that often perform in different markets), gaining market share, or in the case of international M&A, entering a foreign market.

For more information about the motivations and strategies behind M&A, read this article.

Considerations for Executing M&A

You must take many factors into consideration when deciding not only if you’re going to pursue a merger or acquisition, but also how you’re going to execute the deal. M&A can be an extremely laborious and involved process, so ensure you spend adequate time and resources exploring the following:

• Financing the Deal: Will you pursue a stock or asset deal? Also, think about additional costs, such as tax implications (which will differ based on the type of deal you pursue), capital expenditures, comparative ratios, and replacement costs.
• Rival Bidders: As the buyer, don’t assume that you are the only party interested in the target company. As the target company, you should explore multiple bids rather than accept the first option.
• Target Closing Date: Keep your ideal timeline in mind. The deal will inevitably take longer than you anticipate, but tracking against a general schedule can help expedite processes and limit stalling. Each party should be aware of the other’s timeline as well.
• Market Conditions: Outside forces, such as trends in your product marketplace (or the larger economy), will undoubtedly affect the success of a merger or acquisition. Spend time on product and market forecasting — and consult outside experts when necessary — to improve your chances of executing a worthwhile and financially valuable deal.
• Laws: Understand the relevant corporate and antitrust laws, as well as securities regulations, when moving through your M&A deal. Additionally, be aware of any exclusivity agreements as you move through the process.

How Long Does the M&A Process Take?

The length of the M&A process can take anywhere from six months to several years, depending on the complexity of the deal. While it can be helpful to draft a timeline and target a closing date for tracking purposes, understand that delays are inevitable, so build in time for change.

Roles and Responsibilities in the M&A Process

Most mergers and acquisitions involve a standard slate of characters. Below is a list of the critical roles and responsibilities in a typical M&A deal:

• CEO: Ultimately, the CEO signs off on the deal and is responsible for making the decision based on demonstrated risks and rewards.
• CFO: The CFO is arguably one of the most critical actors in any M&A deal. The CFO is responsible for evaluating the financial risks, liabilities, and rewards of the deal, managing the due diligence process, and reporting this information to the CEO.
• External Consultant: Many companies involve a third-party consultant to help with the due diligence and valuation processes. An external evaluation can remove any emotional bias from the equation, so you can face the numbers objectively.
• Investment Bankers: In M&A, investment bankers act as financial advisors and represent either the buyer or seller during the process.
• Legal: Most companies seek external legal help to guide them through the deal and ensure that they meet all legal parameters.

The Benefits of M&A

When you execute a merger or acquisition strategically and intelligently, you enhance your company’s competitive position in the market and improve its financial credit. In addition, the M&A allows you to enhance business relationships, expand your offering of products and services, heighten brand recognition, and increase capacity at a lower cost.

What Are the Steps in the Merger and Acquisition Process?

In this section, we’ll walk you through the critical steps in the M&A process for both the buy and sell sides.

For additional help navigating the process of M&A, you can find 20 of the most useful merger and acquisition templates — for everything from planning to valuation to integration — in this article .

Steps on the Buy Side of an M&A

• Develop an acquisition strategy. The first thing a buyer needs to do is strategize about how they will pursue an acquisition. Define what you hope to accomplish by purchasing another company, and take into consideration the current market conditions, your financial position, and future projections.
• Set M&A search criteria. Once you’ve defined your M&A goals, make a profile of your ideal merger or acquisition. What should this company provide? Consider company size, financial position (profit margins), products or services offered, customer base, culture, and any other factors pertinent to your position as a buyer. You will further scrutinize all of these factors during the valuation and due diligence phases, but it’s important to set general criteria at the outset, so you don’t waste time entertaining suboptimal candidates.
• Search for potential target companies. After you’ve set your criteria, you can begin your search for ideal companies. At this stage, with the information available, you should perform a brief evaluation of the potential target companies.
• Start acquisition planning. Now is the time to make initial contact with your candidates (typically only one or two). As the buyer, you should send a letter of intent (LOI) or teaser , in which you express interest in pursuing a merger or acquisition and provide a summary of the proposed deal. (At this point, any proposal should be very high-level, as it’s subject to change.) In addition to kicking off the conversation with the target company, sending an LOI is also a good way to get more of the information that you will use in valuation.
• Perform valuation. This is one of the most critical steps in the M&A process. Here, the target company provides the buyer with important information about its business — namely, financials — so the buyer can evaluate its value, both as a stand-alone company and as a potential merger or acquisition. In addition to financial analysis, you must also consider culture fit, external conditions that might affect the success of the deal, timing, and other forms of synergy. Ideally, you should produce multiple valuation models that can help you decide whether or not to pursue a deal. It’s common to hire outside counsel to perform (or assist with) valuation. You might also consider performing a SWOT (strengths, weaknesses, opportunities, and threats) analysis for the target company. Use the basic SWOT analysis template below to document all the factors affecting your decision, and find more tailored SWOT analysis templates here .   

Download Basic SWOT Matrix Template

Excel | Smartsheet

• Negotiate and sign the deal. This is the point where you make a “go/no go” call. Use the products of your valuation models to create an initial deal, then present that deal to the target company. Next, you’ll enter a period of negotiations; the deal is finalized once both parties agree to and sign the deal.
• Perform due diligence . In M&A, due diligence refers to the evaluations you perform to ensure every detail is in order before you finalize a transaction. At this stage, the buyer should create financial modeling and operational analysis, as well as assess the culture fit of the two firms. The LOI should provide a ballpark for the timeline of due diligence (typically 30-60 days), but the schedule will vary depending on the firm. To get started, check out this comprehensive list of free due diligence templates.
• Create purchase and sale contracts. Once you’ve completed due diligence — assuming you haven’t uncovered any major issues — you write the final purchase and sale contracts, including the type of purchase agreement you are entering (i.e., a stock or asset sale). Once all relevant parties sign these contracts, the deal is considered closed.
• Create the final financing strategy. While you’ll already have conducted analysis and created a strategy around finances at this point, you may still have to make adjustments when the final purchase and sale contracts are signed.
• Begin integration . Once you’ve finalized the deal, you can begin the work of integrating the two firms. This takes planning on all fronts — finances, organizational structure, roles and responsibilities, culture, etc. — and is an ongoing effort that you should continually monitor and evaluate for many months (and even years) to come.

Steps on the Sell Side of an M&A

It helps to organize sell-side processes into larger phases:

Phase One: Prepare for the Sale

• Define the strategy. As the seller, you must know your goals when entering a potential sale — even if you don’t end up getting acquired. The executive team, along with any outside counsel you solicit, should define the objectives of pursuing a sale and identify your ideal buyers (or buyer qualities). Be realistic and allow your company’s financial and market decisions to help drive your strategy.
• Compile the materials. Once you’ve committed to pursuing a sale, you need to make a comprehensive kit that formally presents your company to potential buyers. If you are working with investment bankers on the sale, they will prepare a confidential information memorandum (CIM), a 50-plus-page document that includes information about your company’s financials, market position, and products and services. (A CIM is also called an offering memorandum or information memorandum .) From there, you can extract information from the CIM to create shorter pieces of documentation, such as a teaser, marketing materials, or an executive marketing plan, which you can share with potential buyers.

Phase Two: Hold Bidding Rounds

• Make contact with buyers. This can happen one of two ways: the buyer contacts you, or you contact them. Be strategic about who you select — of course, you want to make contact with more than one potential buyer, but don’t overwhelm yourself with options or waste time on unlikely candidates.
• Receive starting bids. Once you’ve made initial contact and the potential buyers have reviewed your materials, you’ll start receiving bids. Don’t settle for the first offer, and be shrewd about what deeper information you provide bidders at this point.
• Meet with interested bidders. Conduct management meetings with interested bidders to learn more about these companies’ intents, needs, and proposed offerings.
• Receive the LOI: Those still interested will send you a letter of intent, in which they explicitly express interest in pursuing a merger or acquisition and provide a summary of the proposed deal. You may receive multiple LOIs from multiple bidders.

Phase Three: Negotiate

• Negotiate with all buyers who submit bids. Once you’ve received bids from all interested companies, negotiate. Refer to the strategic intent you laid out at the beginning of the process, and invoke external expertise. Also, by this time, be sure you have all the financial information that’s available, should you move forward with a deal.
• Draft the definitive agreement. Buyers and sellers work together to draft a final deal.
• Enter into an exclusivity agreement. You are now locked into an exclusive deal with the buyer — you can’t pursue further negotiations or solicit interest from other potential buyers.
• Help facilitate the buyer’s due diligence. It can take more than two months for the buyer to complete their due diligence evaluations, but you, as the seller, can help expedite the process. Prepare all documentation ahead of time, and stay in close contact throughout the process, so you can swiftly handle issues as they arise.
• Get final board approval. When the buyer has completed due diligence and plans to move forward, solicit final board approval.
• Sign the definitive agreement . Once you sign the final agreement, the deal is closed — you have either merged with or been acquired by another company, and integration begins.

What Is an M&A Process Letter?

Also known as a bid process letter or bid procedure letter , an M&A process letter accompanies the confidential information memorandum (CIM) in an M&A auction. The process letter typically provides information on the M&A auction schedule, instructions, and contact information for all future communication, as well as any terms that the bidders must include if they make an offer.

M&A Best Practices

M&A is a complicated process that relies on deep analysis, attention to detail, and compromise. Below is a list of additional best practices, in approximate chronological order:

For the Buy Side:

• Approach the target company diplomatically. Understand the company’s position before initiating contact, and be sensitive to how it might receive your offer.
• Find and retain experienced leadership/advisors.
• Keep culture fit in mind — from first contact through integration.
• Develop trust between the intermediary and seller (if you’re using a third-party consultant or legal team). Keep communication open among all parties throughout the process.
• Create a transition plan, so you don’t head into integration blindly.
• Continually monitor the success of the merger or acquisition over time.

For the Sell Side:

• Don’t jump at the first offer. Know the strength of your position, and involve outside advisors if you need help with this analysis.
• Find and retain experienced leadership/advisors who will have your best interests in mind.
• Engage in conversations with real-world buyers rather than relying on analysis. Doing so will strengthen your position and savvy; it will also present an opportunity to bolster business relationships.
• Bring multiple buyers to the table to increase value.

Throughout the process, issues are bound to arise on both the buy and sell sides. Both parties should resist the urge to get too emotional or latch onto highs and lows — instead, solicit help when you need it, and keep communication open and honest.

Once you progress to the integration phase, be sure to perform periodic reviews on personnel, products, and operations. Successful integration relies on continually paying attention to what is and isn’t working and finding ways to compromise rather than set hard and fast rules for how the business will continue as one entity.

The Role of Automation in M&A

Automated software can be useful to the M&A process in a number of ways, including the following:

• Automated software can help with management: scheduling, timeline, collaboration, etc.
• Automated software can help with data transfer/integration.

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How to plan and execute successful mergers and acquisitions

Lucid Content

Reading time: about 12 min

A merger is defined as two or more companies mutually agreeing to come together to form a new company.

An acquisition occurs when one company takes over another company. The purchasing company buys a controlling interest or the entire business operation, including assets. The purchased company is absorbed by the purchasing company and a new company is not formed.

There are many reasons why mergers and acquisitions occur, all of which ultimately boil down to economic reasons—you want to make more money while spending less. Common reasons for mergers and acquisitions include:

• Decrease the competition.
• Increase operational capacity and efficiency.
• Grow market share.
• Increase revenue and decrease costs.
• Diversify products or services.
• Acquire unique, patented technology that fits well with the acquiring company.
• Combine similar companies, products, technologies, and efforts.

Let's discuss the lifecycle of mergers and acquisitions and outline the steps you need to take in order to be successful.

Mergers and acquisitions life cycle

The mergers and acquisitions (M&A) life cycle is broken down into three categories: Strategy, Execution, and Integration.

Strategic planning helps protect you from M&A failures. Just because you want to buy a company doesn’t mean you should buy that company. There are several questions you should ask yourself when researching target companies.

• Why do you want to acquire, or merge with, another company?
• What is your business objective?
• Do the target company’s products or services fit with your objectives?
• What value will the deal bring you?
• What is the value of the target company?
• Does the company culture fit with your company?

These types of questions can help you narrow your choices as you screen the companies you are interested in, determine target company valuations, structure deals, and analyze how your business decisions will give you an advantage in the current market.

Importance of synergy

Synergy is a combined action or operation. Many companies decide to merge with or acquire another business based on potential synergies that can come from combining similar products and technologies. The following are some benefits that synergy can bring when companies merge:

• Combine workforces—Identify and eliminate redundancies and restructure workflows to increase efficiency and to accommodate increased business volume.
• Combine technologies—Combining similar technologies can help a company to achieve strategic advantages in your market.
• Reduce costs—Consolidation can improve your purchasing power and decrease costs as you negotiate better terms with vendors based on the need for more materials because of increased output.
• Market expansion—There is potential that combining companies will create an advantage in a particular market, or enter into a market that was not previously available to you.

During this phase, you’ll want to gather experts and people with M&A experience. You need people who are expert advisors in HR, IT, operations, legal, taxes, and finances to help you cover all your bases and to help the transition run smoothly.

All of this experience, expertise, and knowledge come together to ensure that closing the deal will continue to meet the goals and objectives you established during the strategy stage.

Integration

Integration brings another set of challenges because now two companies with two cultures need to figure out how best to work together.

You will need to put together an integration team to help the integration run smoothly. Members of this team should include:

• Senior executives to keep stakeholders informed about merger progress, to communicate the value of the merger, and to ease concerns about the company’s future.
• Due diligence team to retain important information. The due diligence team works with the integration team to ensure that all data is successfully transferred, that there are no redundancies, and that no information is lost.
• Human resources to communicate with and answer questions from employees about job positions, benefits, roles, and expectations going forward. 
• Change management experts to help the purchased company feel cared for, to drive employee morale, and to help employees and stakeholders buy in to the idea of being acquired. Change management experts can help to avoid problems.

Consider using existing org charts and drawing new charts as needed during the integration phase. Org charts can give you valuable information like where people are physically located, what teams they are assigned to, their specific roles and responsibilities, and who reports to whom. This information can give you insight as you plan for restructuring organizations, departments, and business units. It can also help you understand the human capital of the organization that was just purchased. 

Steps for the buyer in the M&A process

Following a step-by-step process is essential for successfully navigating your way through the complexities of M&A. Below we briefly discuss 10 steps that the purchasing companies typically use during the M&A process.

Step 1: Develop an acquisition strategy

This step falls within the strategy phase of the M&A lifecycle. It is essential that you know why you want to acquire a company and what you expect to gain from the merger.

Step 2: Set the M&A search criteria

Determine the criteria for searching for potential targets, such as location, industry, profit margins, customer base, and so on. 

Step 3: Search for potential acquisition targets

Use the search criteria you identified to look for and evaluate companies that may fit with the goals you want to achieve from acquiring the other company.

Step 4: Begin acquisition planning

Contact the companies that were found in your searches. Get more information to begin evaluating the potential value of a deal and to see how open the company is to M&A. 

Step 5: Perform valuation analysis

When you find a company that is interested, ask for financial, market, and other information that will help you to begin determining the company’s value as a standalone company and a potential acquisition target.

Step 6: Begin negotiations

Create some valuation models to give you enough information to make a reasonable offer. After the offer is made, negotiate terms and iron out details.

Step 7: Perform M&A due diligence

When the offer is accepted, your due diligence team starts an exhaustive process that works to confirm or correct the purchasing company’s assessment of the target company’s value. The team performs a detailed examination and analysis of the target company’s entire operations including finances, assets, liabilities, customers, employees, and so on.

Step 8: Draft a purchase and sale contract

If due diligence does not unearth any major problems or concerns, write up a final contract for the purchase by the acquirer and the sale by the target company. The contract defines the type of purchase agreement—asset purchase or share purchase. 

Step 9: Develop a financing strategy for the acquisition

Financial options have most likely already been explored, but at this step you need to work out the details after the purchase and sale contract is signed.

Step 10: Close the deal and begin acquisition integration

After the deal is closed, the management teams from both companies work together to integrate the two businesses into one as seamlessly as possible. Members of the HR team and change management experts work to make employees feel like they are all part of the same team. Use org charts to get a quick overview of company hierarchy to help with restructuring and reorganization.

Best M&A practices for the buyer

Because M&A is a complex process, you will need to pay attention to detail, remain focused, and be willing to compromise. Below are a few best practices to consider when you are on the buying side of the M&A.

Be diplomatic and sensitive with your offer —Don’t make this a hostile takeover. You should have done your homework and should have found the company that best fits your criteria. Your offer needs to be beneficial to you as well as to the company that is being purchased.

Put together a team of experienced leaders and advisors —Experience and strong leadership can help put all interested parties more at ease with the process. If your team doesn’t act like they know what they are doing, it will be harder to get buy-in from employees.

Culture fit should be top of mind —Keep in mind that there could be some pushback from the company being acquired if the company cultures clash. 

Be trustworthy —Be honest throughout the M&A process. The acquisition will fail if employees from the purchased company feel that the buyer is dishonest and untrustworthy. 

Communicate and be transparent —M&A is a stressful time for employees. Keep the lines of communication open to help alleviate fears and anxieties that could negatively impact productivity. Answer questions honestly and promptly.  

Develop a transition plan —Before the deal is closed and even before due diligence is completed, work on a transition plan. Work with HR and use org charts to evaluate employees to find the best fit for leadership positions and team assignments.

Steps for the seller in the M&A process

It’s possible that a purchasing company might have more experience in the M&A process than the selling company. However, the seller also plays a key role in the process and should not just sit back and let the buyer call all the shots. The following are a few steps for the seller to take to help with mergers and acquisitions.

Step 1: Define the strategy

Just like the buyer needs to know why they are looking to acquire a company, the seller should have a clear idea of why they want to sell. Know what the rationale is and what objectives you want to achieve from the sale. Identify the buyers, or the qualities you want in potential buyers, that would contribute to an ideal selling situation.

Step 2: Compile information

Put together a comprehensive informational kit to formally present your company’s products and services, technology, financial standing, and market positions to buyers.  

Step 3: Contact buyers

Whether a buyer reaches out to you or you reach out to potential buyers, be strategic and only talk to companies that will be a good fit. Contact more than one buyer, but don’t waste time with buyers who are unlikely to acquire your business. 

Step 4: Take bids

Ideally, after companies have talked to you and evaluated the informational materials you have put together, the offers will start coming in. You never want to take the first offer. Weigh all the offers to see which is the most beneficial for you and for the buyer.

Step 5: Meet and negotiate with interested bidders

Meet with the companies that are interested in purchasing your company to find out more about their intentions, what their needs are, and what they are proposing and offering. After you have looked at bids from the interested parties, start the negotiations. Refer to your defined strategy to help you narrow down to the best candidates. Remember that until the company is sold, it is still your company. Any promises made by either side are moot until negotiations are completed and the final agreement is signed.

Step 6: Draft an agreement

The buyer and the seller work together to draft a mutually beneficial deal. Once you enter into an exclusivity agreement, it means that you are locked into an agreement with the company that wants to acquire your company. At that point you can’t seek out other buyers or enter into negotiations with other entities.

Step 7: Facilitate buyer’s due diligence

The buyer will have to complete due diligence before the sale can be completed. It can take up to two months to complete due diligence. Help speed up the process by gathering all documentation ahead of time and stay in close contact with your buyer to help solve any problems and issues that may come up.

Step 8: Get final board agreement

When the due diligence process is completed and the buyer wants to go forward with the purchase, get final agreement from the board.

Step 9: Sign the agreement

When both companies have signed the final agreement, the company has been sold and has merged with or been acquired by the buyer.

Best M&A practices for the seller

Mergers and acquisitions can be a long and emotionally draining process. You will need to remain focused to ensure that you are getting the best deal. The following are a few tips and best practices you may want to consider during the process.

Don’t take the first offer —Unless it is your only offer, the first offer may not be the best offer. Even if it is the only offer, you are free to negotiate if you feel like the offer undervalues your business and technologies.

Bring more than one buyer to the table —This gives you a better opportunity to determine which company is a better fit. While the sale is about money, it’s not all about the money. You need to sell to the company that most closely aligns with your company’s values, culture, work ethic, and so on. 

Form a team of experienced leaders and advisors —Working with, and listening to, people who have experience in these types of business dealings can help you to make informed decisions. Don’t rely on analysis alone. Talk to experienced buyers and sellers and be open to the advice they give you.

Don’t ask too much or too little for the business —A really high or unrealistic price tag can stop negotiations before they begin. On the other hand, setting a price that is too low gives the impression that you don’t understand the worth of your business. Make sure you know what the company—including its technology, assets, and human resources—is worth.

The M&A process doesn’t happen overnight or even in a couple of weeks. It is a long, complex, and detailed process that requires patience, diplomacy, compassion, and compromise. The steps and best practices we’ve outlined can help you to remain focused, pay attention to detail, and get the deal done right.

How can you better prepare employees for an M&A? See our list of guidelines.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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Mergers & Acquisitions: Complete Guide to M&A Project Management

April 29, 2022 - 10 min read

Mergers and acquisitions (M&A) are a consolidation of companies and their assets through various types of financial agreements, including debt-to-equity, tender offers, purchase of assets, management acquisitions, mergers, or acquisitions. 

A merger is an agreement that unites two existing companies into one new company, while an acquisition is where one company purchases most or all of another company's shares to gain control of the business.

Both are complex processes that require an incredible amount of planning, organization, communication, insight, and management. Deal teams must have proper management expertise, tools, and technology to advance each one.

This is where M&A project management comes in. M&A planning is a component of your organization’s strategic planning. Whether you're the company that is acquiring or selling, it's essential to stay on top of what happens in your industry. M&A managers should know how mergers or acquisitions within their industry may impact their organization's positioning.

What is M&A project management?

M&A project management is the process of applying project management best practices to pre- and post-merger activities. When two companies consolidate or one firm acquires another, there is a series of complex steps an M&A project manager must execute to close the deal and integrate both companies successfully.

It's important to be confident in your ability to manage a project from start to finish, as M&A projects are often lengthy and involve conversations at various stages along the way. M&A project management uses project management methods to achieve the goals of the M&A deal, which generally include creating higher value for shareholders and maintaining business continuity . 

M&A project management handles responsibilities, including designating key roles and tasks, supervising workflows, and establishing standards, timelines, and targets in the post-merger organization.

What does an M&A project manager do?

Industry-specific knowledge for an M&A project manager is helpful but not required. It's more important that M&A managers have experience closing M&A deals and implementing integration plans post-merger and a clear idea of each individual project definition when beginning a new M&A deal.

The M&A project manager evaluates both companies’ opportunities for mergers, acquisitions, and divestitures . They oversee pre- and post-merger financial planning, scoping, closing, and integration and coordinate research and analysis activities to assess risk and impact. M&A project managers must be adept at collaborating with stakeholders, managing staff, and developing financial models and projections to estimate cash flow and profitability potential.

A good M&A project manager should have the following skills: 

• Governance : M&A project managers must know how to structure teams, lead execution, and control processes to run the organization simultaneously with post-merger M&A projects.
• Finance knowledge: An M&A project manager should be familiar with financial planning alternatives for financing the deal. They should have financial management and budgeting skills to manage money in the post-merger organization.
• Risk management : The M&A project manager works to achieve the transaction's goals and avoid financial loss. They should be skilled in opportunity-spotting and familiar with law, regulations, strategic thinking, and risk analysis . 
• Performance management: The M&A manager should understand and communicate the critical success factors of the post-merger organization, developing metrics to reflect them and adapting to make sure the team meets its goals.
• Quality assurance: The M&A project manager must ensure all staff members adhere to best practices, complete projects successfully, and document processes and lessons to improve future M&A projects. 
• Work management: M&A work management includes project management skills as well as maintaining collaborative team spirit and productive workflows. It involves applying technology to execute tasks and meet project goals.
• Information management: Due diligence in M&A can spiral out of control if there is no process for reviewing, storing, and collating corporate data. Efficient M&A project management requires managers to store data in a secure yet accessible workspace where team members can communicate and work in real time, making data-driven decisions. 
• Resourcing: Resourcing means knowing how much time, money, people, and other assets you need to execute M&A projects. It also means securing, allocating, and managing these resources efficiently across your ongoing projects.

Why is M&A project management important?

M&A project management is critical because it impacts the post-merger relationship between both companies. M&A is itself a big project with extensive interdependencies. Good M&A project management helps to keep your teams on track, aligned, and successful. Other benefits of M&A project management include:

• Better deal strategies 
• More realistic pricing 
• Alignment between organizations 
• Specified roles and responsibilities
• Prioritization of the most critical tasks 
• Fewer operations disruptions during M&A integration
• More effective stakeholder communications 
• Decreased risks in the post-merger company 

M&A project management provides guidelines, structure, and documentation to close M&A transactions, integrate operations, and make adequate, realistic staffing and resource allocation decisions in the post-merger organization.

Key processes in pre-merger M&A project management

M&A project management is crucial during the pre-merger phase, as it lays the foundation for the rest of the M&A implementation. This includes developing your strategy, searching for targets, conducting negotiations, and making efforts to close a deal. 

To start a project, you need to create a project charter , define its scope, identify your objectives, and bring relevant stakeholders on board. Next, break down the work into tasks and subtasks, setting due dates, allocating resources, mitigating risks, and estimating costs.

Then it's time to execute. Assign responsibilities within your team and create a single source of truth to communicate and collaborate in real-time. A collaborative workspace like Wrike provides a secure platform to achieve these and keep team members on track. Steps in a typical M&A project execution include:

• Scheduling kick-off and status meetings
• Conducting due diligence
• Assessing performance
• Comparing targets
• Estimating risk
• Updating stakeholders
• Documenting lessons
• Consulting experts
• Planning integration 

M&A pre-merger project management tasks usually involve:

• Strategy alignment: Clarify what your company aims to gain from the merger or acquisition and confirm that you're aligned with potential partners.
• Screening: Develop guidelines for selecting potential targets, such as organization size, location, revenue, product, or market. Create a list of candidates that match these criteria and assess them on other factors and alignment with your company. 
• Preparatory work: If the target company is receptive to a deal, sign a confidentiality agreement and review the business. If the review is favorable, send a written offer — usually a price range, not a fixed price.
• Negotiations: Discuss terms and try to close a good deal. Your price may be based on information about the industry or the state of the business. When you reach a price, sign a letter of intent with the other party. 
• Due diligence: Conduct in-depth reviews of the target company's accounts and records to verify the status of the business and check for hidden liabilities.
• Contract development: Write, review, and authorize a final contract for the M&A transaction. 
• Financing: Raise the money for the transaction. You can do this through loans, debt, stock issuance, or a combination of these options. 
• Closing: Representatives of both the buyer and the seller sign contracts and exchange money. 

Pre-merger M&A project management best practices

In the pre-merger phase, project management best practices ensure sound decision-making and risk management. Best practices include:

Using a phase-gate process to manage M&A projects

Using the phase-gate process in M&A project management is a great way to organize and execute tasks in phases as you advance from one critical stage to the next. 

The phase-gate process requires a review of each project stage before moving on to the next. Specific criteria must be met to determine the success of each phase. This helps the acquiring companies review hundreds of potential M&A targets to find the best deal. Setting clear criteria for what makes a target eligible enables you to maintain focus on your organizational needs and strategy. 

Without defining clear parameters, your team may waste resources going after candidates that do not align with the M&A strategy. Typically, there are three main decision points in the pre-merger M&A phase-gate process:

• Strategy approval: You decide whether a deal candidate fits your company's strategy. You do this based on the alignment of values, goals, and other critical factors, such as increased revenue or percentage gain in market share. 
• Negotiation approval: After you have assessed your candidates, you must decide whether to start negotiations with any of them. Based on your review of their financial information, confirm that your objectives for a deal remain realistic. At this phase-gate, you set a target price for a transaction. 
• Deal approval: This decision point is your final yes/no review, where you seek definitive agreement from your board and management. At this point, you are beyond questions about strategic fit and valuation. You seek approval of other details, most of which depend on the nature and goal of your transaction.

Other pre-merger best practices

Other pre-merger project management practices are similarly aimed at making sure your deal is sound and has a good chance of success.

• Articulate "why": Have a clear pitch for pursuing an M&A. List the advantages of doing so against alternatives that would achieve the same objective. Articulate why a merger or acquisition is one of the best ways.
• Be aware of the mental traps: Look out for biases and mental traps that can skew your judgment about the M&A. An example is recency or confirmation bias . Consult diverse stakeholders and actively seek out opposing views.
• Bring in experts: If you're new to M&A, improve execution and chances of success by hiring experienced M&A consultants and advisors to strengthen your process and conduct due diligence.
• Be diligent about due diligence: Be dogged in the vetting process to avoid undiscovered liabilities after a deal closes.
• Coordinate your work: Improve your M&A system with a focused project plan that defines roles, activities, and responsibilities for all team members. Keep this in a centralized location, easily accessible to all employees.
• Prioritize actions in order of impact: Identify tasks with the highest, immediate payoff on the business, and gain some wins and momentum to demonstrate ROI on the M&A deal.  
• Get sponsorship: From inception, make sure senior management and board members buy into and back the M&A strategy. 
• Define the work to be done post-merger: Do this collaboratively with your teams as you wrap up the M&A deal.
• Keep your teams in the loop: Communicate clearly about strategy, expectations, and changes. Ensure staff members know what’s going on, what to do, and what information is confidential until finalized. 

Key processes in post-merger M&A project management

Post-merger M&A project management focuses on:

• Team planning 
• Integration of the companies
• Building organizational structure
• Stakeholder updates
• Monitoring performance
• Achieving M&A goals

Post-merger M&A project management best practices

The post-merger period builds the foundation for realizing the intended benefits of the M&A. Without post-merger project management best practices, missteps can ruin the partnership's potential. Strong project management decreases your risk and provides you with a system.

Best practices for project management in the post-merger stage fall into broad categories: 

• Project planning
• Communication
• Resource planning
• People issues
• Monitoring progress
• Measuring performance

It’s critical to carry along your team to tackle post-merger tasks with high productivity and engagement. Create a rewards strategy that combines growth opportunities, recognition, and benefits to incentivize employees to achieve post-merger goals.

Ensure your company's mission remains clear and communicate changes quickly, so your employees have stability amid the new developments. Make sure they understand the M&A rationale and how it ties into your original vision so that they can commit their best efforts to its success. 

When it comes to people and culture-fit in the post-merger organization, tread prudently. Organize staff-related issues, e.g., planning for layoffs, creating a new corporate structure, and assigning key responsibilities before moving on to the M&A integration plan.

Common M&A project management mistakes

According to a report in the Harvard Business Review, 70%-90% of M&A projects fail due to common challenges and mistakes. Here's a list of the most recurring mistakes M&A managers make:

• Moving too fast with an integration plan
• Overextending resources
• Insufficient attention to target company culture
• Poor management of relocations and consolidations
• Weak IT planning
• Inadequate M&A project management controls
• Lack of planning for heightened competition
• Inadequate efforts to identify synergies

Acquirers often push their ethos and culture without a healthy transition period for the acquired company. This causes chaos, disorganization, and low morale among employees. Underestimating and overextending staff and resources is another frequent mistake in M&A projects. 

How to create a merger and acquisition project plan

Your M&A project planning process must be disciplined and comprehensive. The following are critical elements of the M&A project planning process:

• Align your vision and strategic plan
• Develop an M&A strategy
• Document relevant M&A policy and procedures
• Assess your organization's M&A readiness
• Identify M&A candidates or partners
• Develop an M&A integration plan
• Conduct post-merger review and assessment

How to create an acquisition plan

One of the errors many M&A managers make as they start a merger or acquisition is not putting together an acquisition plan. The acquisition plan guides the entire process and is a much-needed asset when planning M&A.

It creates a roadmap for what you want from the M&A and reassures sponsors that the merger or acquisition is thought-through and well-managed. 

When writing your acquisition plan, ask yourself if what you're writing explains the M&A opportunity clearly. The format of the acquisition plan follows a similar structure as a typical business plan. Here's an outline of an acquisition plan:

1. Executive summary

Your executive summary should be concise, information-rich, and no more than one page in length. Its goal is to sell the M&A opportunity as best as possible. Make sure to include your target market, business strategy, and summary financials. Investors may read only this page before skipping to the financial projections, so make sure it's strong.

2. Target description

This section outlines the target business and why it's worth what you're proposing to pay for it. Be as thorough as possible. If you see specific weaknesses in the business, talk about how you can iron them out and create value. Make sure to include:

• Headline financials
• A breakdown of the company's primary assets and liabilities
• Organizational structure
• A current SWOT analysis

3. Market overview

The more granular the detail and relevant to your region this section is, the better. Answer the following questions:

• How many customers does the target have?
• What kind of customers are they?
• Is there a different kind of demand for the target outside of its current customer base?

4. Sales and marketing

This section covers sales for the target's products and services. It should compare their pricing strategy to yours and show how both companies conduct marketing. 

5. Financial history and projections

This section is the one that can make or break the deal. You should be as thorough as possible, reviewing and assembling the target's past financial performance. Typically, this should involve at least three years of financial statements and tax returns. Each one should be comprehensive and honest, having supporting documents where needed. 

Raise any issues which may conflict with your business, e.g., different credit arrangements with customers. You should also look at projections for the business. Going through the past and projections sections is a useful exercise to summarize where you will make gains or losses from the merger or acquisition.

6. Transition plan

This is a brief section showing how the business will move from the control of the current owners to the post-merger owners. This section should detail how sales relationships, contract agreements, and intellectual property will be dealt with in the post-merger organization. Minimize the chaos that can come with transitioning the organization by getting this section right. 

7. Deal structure

This section shows the financial structure you will use to acquire the target company.  

8. Appendices and supporting documents

This should include copies of tax returns, compliance licenses, and receipts, including auditors' letters and other relevant legal documents. 

While there is room for variation in sections of each business plan, every plan should convince the reader of the merits of the merger or acquisition. Each section should be compelling, relevant, and detailed.

How Wrike can help with M&A project management

M&A experts recommend using project management techniques to organize your tasks from the beginning when exploring potential deals until you fully complete an M&A transaction and start integrating both businesses. 

Wrike helps M&A executives and project managers communicate and collaborate in real-time, manage information flows and workflows, get approvals and signatures, maintain deep visibility, and extract insights from different sections of the acquisition plan and ongoing projects. 

This collaborative approach with Wrike minimizes chaotic work, misalignment, and scattered collaborations in the post-merger organization. Try Wrike's project management software for free with a two-week trial .

Kelechi Udoagwu

Kelechi is a freelance writer and founder of Week of Saturdays, a platform for digital freelancers and remote workers living in Africa.

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What Is Risk Identification in Project Management?

If you Google ‘why projects fail’ you’ll get several pages of articles and resources, including 5 Reasons Why Project Work Plans Fail and How to Avoid Them here on Wrike. A lot of the reasons are procedural relating to scope definition, methodology, and communication, for example, but there is a common theme: an inadequate risk identification process. Poor risk management isn’t just an issue that impacts big businesses. Smaller businesses are prone to the same types of mistakes and their consequences, which can be just as (if not more) catastrophic for them. Project risk identification is not just for enterprises but a practice that should sit at the core of any business’ modus operandi. What is risk management? Risk management is the process of identifying, tracking, and managing potential risks that can impact the overall health and reputation of a business. The Association for Project Management (APM) in the UK describes it well: “Risk analysis and risk management is a process that allows individual risk events and overall risk to be understood and managed proactively, optimizing success by minimizing threats and maximizing opportunities and outcomes.” Without buy-in from the top, proper stakeholder engagement, and a disciplined approach to risk identification and management, a project will carry a higher risk of failure. The lesson here is to tackle risk at the very start of a project and let your learnings inform decisions relative to scope, process, and resourcing. Consider issues that come up time and again across projects, such as fixed price contract risk, or risk related to certain times of year for customers. Our How to Make a Risk Management Plan article covers this and includes examples you can refer to.  Remember this too — risk management is not just a process but about culture as well As Tom Wilson, Allianz Chief Risk Officer, reminds us: “Risk management is a culture, not a cult. It only works if everyone lives it, not if it's practiced by a few high priests.” On a higher note, there are also risks that can benefit a project. For example, a potential change in an organization’s policy that would remove red tape and save you time. These are typically referred to as opportunities, while negative risks as threats. You can learn more about this by reading our What Are Positive Risks in Project Management? post. What is the risk identification life cycle and process? Diving deeper we find risk identification, which is the first step of the risk management process. We’ve described step one in our Project Risk Assessment guide: "Create a list of every possible risk and opportunity you can think of. If you only focus on the threats, you could miss out on the chance to deliver unexpected value to the customer or client." Notice how the latter part of the definition makes a strong case for including positive risks in your planning — take every opportunity to delight stakeholders. So, how do you go about identifying risks? There are different frameworks for this and you should choose one that best fits your organization's working practices and resourcing. The Project Management Institute (PMI), for example, published a comprehensive guide that explains its model in detail. This may be overkill if you’re working on a simple project or within a small organization but worth understanding nevertheless. Let’s consider context first. Much like a project within a project, the risk identification life cycle is a process that delivers key elements of an overall risk management plan. The Risk Identification process itself follows a defined structure and is elaborated progressively through six stages: Template specification Basic identification Detailed identification External cross-check Internal cross-check Statement finalization How to identify risks in project management For brevity, we’ll focus on the initial three steps as they cover risk identification specifically (while the remaining steps are about validating and formalizing findings against the overall project’s scope). Template specificationThis is a risk statement based on feedback about causes, effects, impacts, areas of risk, and events. A structured template helps you capture this in a consistent way. Basic identificationAnswering two questions about potential risks: why or why not us and whether they have been experienced before. The former can be captured via SWOT analysis exercise while the latter is a statement, ideally referenced from a project post mortem or lessons learned library. Detailed identificationThis step is more time-consuming than the previous ones but also delivers the detail you need to properly assess risk. PMI identifies five tools to use: Interviewing Assumptions analysis Document reviews Delphi technique Brainstorming Once you’ve completed these steps you’ll need to categorize risk in the next one — the External cross-check step. We’ve covered this in our Understanding Risk Breakdown Structure article. Step five is the Internal Cross-check which maps risks to corresponding elements in the scope of work. At this point you will start forming a view of what project elements are riskier than others, and what mitigation strategies to adopt. The final step, Statement Finalization, packages findings in a series of diagrams covering risky areas, causes, and impacts. Tip: Use a tool like Wrike to maintain a risk register spanning all of your projects which you can refer to whenever you start a new one. Risk identification example Here are a couple of examples, the first one based on PMI’s methodology outlined above and the second one captured in an online risk register. Risk identification example 1 Risk identification example 2 The two examples are not necessarily alternative approaches. Rather, the first one is a sample risk identification template, and the second one is a risk register holding the same information. By using an online project management tool it becomes much easier to manage both processes and give visibility to stakeholders. How to make a risk management plan Think of the risks you have identified as the foundation blocks of your risk management plan which typically includes the following elements Risk identification Risk evaluation Assignment of risk ownership to project team members Risk responses Plan to constantly monitor for new risks and address them appropriately By the time you have completed the risk identification step, you will be able to refer back to detailed information for each to evaluate them, assign ownership, and determine responses. Work doesn’t stop once you’ve done that. As the project progresses, you’ll need to monitor for and identify new risks. Risk ownership plays an important role here too, so make sure you’ve defined processes for communication and escalation. This brings us to the next question: who should oversee risk?  Who should oversee risk?  Large organizations appoint risk managers at the C-suite level and often form risk committees with representatives from different departments, who report back to the CEO and the Board. Large organizations will have their risk governance regularly audited by external parties too. The model becomes increasingly ‘risk governance lite’ for smaller businesses but project risk identification and management should always be a priority. It’s good practice to assign responsibilities at the very start of a project, mapping roles with responsibilities. Here’s what this could look like for larger organizations. Project sponsor Has overall responsibility for a project and a view of and signs off on the risk management plan. Project manager Overall responsibility for risk management including communication and escalation. Risk owner This could be a member of the project team or a stakeholder who isn’t part of it but nevertheless owner of individual risks. Risk Committee Has a view of risk across every project of an organization. In smaller organizations, you’ll see business owners wearing the project sponsor hat and are less likely to have risk committees too. The more diligent ones will cover risk just as effectively by streamlining the process. Risk identification template A template to list and analyze risks is an easy way to ensure you and your stakeholders are on the same page. With Wrike's Project Risk Analysis Template, your team can quickly and easily identify potential risks and their scope, mitigate risks by prioritizing certain tasks, and implement RAID (risks, assumptions, issues, and dependencies) logs into your workflow. Wrike's template comes with pre-built request forms to help you create detailed RAID entries when they arise. As you can see from the table above, each risk, along with its impact, probability, and proximity scores, are all listed in one place, so your team can capture and mitigate risks at a glance.  Using Wrike to manage (and mitigate) risks Risk management is a critical and substantial component of project management. It can be an expensive exercise too if you consider that it can eat up to 20% of the total project’s time. It’s therefore surprising to learn that many larger organizations rely on outdated tools like documents, spreadsheets, and emails to manage risk. . This presents all kinds of risks if you think about it. How many times has a file gone missing or an older version updated and circulated? By using a modern, versatile, and powerful project management tool like Wrike you gain efficiency and reduce risk at the same time. Here’s how: Your risk identification and management process is centralized and easily accessible You can design workflows to facilitate steps in your risk management plans You can add multiple levels of categorization and tagging to risks to search them across multiple projects You get alerted of the more critical and high priority risks  You’re always up to date and can run reports at the touch of a button You communicate and collaborate in real-time If this looks like a more streamlined approach than what you’ve currently got then you really need to consider Wrike for your next project. Get started today with a free two-week trial and learn how Wrike can help manage project risks and of all sizes.

The Future of PMOs: Understanding the Challenges

The Project Management Office, or PMO, remains an increasingly essential part of a successful organization. And as new technology emerges and companies seek greater innovation, PMOs must evolve to remain relevant and valuable. So what is a PMO, and how do they add value to your organization?

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Corporate development team

Transaction lead, external advisors.

M&A committee and C-suite

The M&A committee consists of board directors and C-suite executives, including the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Operating Officer (COO). It’s responsible for the M&A process overview and, therefore, the entire transaction’s success. The key M&A committee duties include the following: 

• Acquisition planning . It develops M&A plans, reviews M&A opportunities, and partakes in high-level negotiations with the sellers (or potential buyers in sell-side M&A ).
• Pressure-testing . It evaluates the viability of M&A deals, ensuring they fit into strategic objectives financially and operationally.
• M&A deal flow supervision . It approves acquisition process steps and ensures the right people complete the right tasks.

The corporate development team executes M&A deals, doing the most work in the M&A lifecycle. It consists of high-level executives, including senior directors, management teams, and analysts assigned to different tasks on the M&A timeline. The corporate development team has the following duties:

• Deal sourcing . It seeks M&A opportunities fitting into the company’s growth strategy. It coordinates market assessments, SWOT analysis, and data reviews.
• Pipeline development . It develops M&A steps and supervises appropriate execution teams. 
• Due diligence . It coordinates and executes the due diligence process, including planning, negotiations, reviews, and analyses. 
• Negotiations . It develops deal terms and negotiates with deal parties and external advisors at each M&A stage, from sourcing to transaction signing. 

Business unit (BU)

The business unit is involved in all phases of M&A while contributing the most effort at late deal stages. It consists of department managers and post-merger integration professionals running the business post-acquisition. The BU has the following roles:

• Support the M&A committee . It actively tracks business competitors and engages in strategic development, suggesting the best M&A timing.
• Project deal outcomes . The BU leadership seeks M&A opportunities beneficial for particular business units and builds synergy and financial projections of ongoing and anticipated acquisitions.
• Support due diligence and PMI . It supervises the processes and addresses arising issues due to expert knowledge in post-deal business management.

The transaction lead deals primarily with M&A closing and post-merger integration. It is an employee with solid due diligence and cross-functional management experience to fulfill the following duties:

• Support PMI due diligence . They engage in late due diligence stages to understand the upcoming integration’s risks, challenges, and opportunities.
• Engage in integration planning . They develop PMI plans and timelines with the M&A committee and business units. 
• Coordinate PMI execution . They supervise cross-functional teams, ensure smooth post-deal integration, monitor risks, and communicate with key stakeholders.

The external advisory group may include legal teams, M&A, due diligence, financial, and investment banking industry professionals. External advisors support the mergers and acquisitions process with the following activities:

• Deal sourcing . They recommend the best M&A opportunities, provide access to target databases, and suggest optimal M&A strategies in specific market conditions.
• Negotiations . They provide legal assistance, evaluate deal terms, mark issues in deal contracts, and partake in M&A negotiations.
• Due diligence . They offer industry-specific experience to reveal hidden risks and opportunities, helping acquirers build realistic deal projections.
• Integration . They support deal execution and PMI efforts to maximize positive outcomes.

M&A process checklist : 5 key stages

Many private equity firms, investment banks, and global consulting firms differentiate five stages in the M&A process timeline which takes an average of 2.1 years to complete:

Preparation and planning

Negotiations, deal closing, post-merger integration (pmi).

In the M&A strategic planning phase, an acquiring company develops an M&A strategy that aligns with its long-term business goals. Here are the crucial steps during this stage:

• Assemble a deal team . Create an M&A committee and assign deal professionals to the corporate development team and within business units.
• Finalize the M&A plan . Decide on the M&A strategy and develop M&A criteria for screening target companies. Make a SWOT analysis and thoroughly research market trends to ensure your M&A strategy meets your business capabilities and objectives.
• Source M&A targets . Find potential target companies and screen them against your strategic fit criteria.
• Make an initial target assessment . Initiate preliminary due diligence (DD) on the final M&A target.

Upon initial screening, merging companies negotiate transaction terms, evaluate and review contracts, and consider the regulatory implications of the proposed deal. Negotiation tactics of key stakeholders and external advisors help formulate a beneficial letter of intent (LOI) that signifies the start of the due diligence phase. Here are the initial negotiation steps:

• Negotiate deal terms . Specify the transaction’s nature and conditions, including the purchase price, cost structure, and due diligence scope.
• Consider M&A regulations . The two firms should evaluate anti-trust regulations if the deal exceeds $111.4 million .
• Consider deal prerequisites . Review tax implications, securities regulations, labor laws, ESG laws, and other matters to be cleared before full-scale due diligence. 

Due diligence is a comprehensive evaluation of the acquisition target. At this point, companies usually sign a non-disclosure agreement to protect sensitive data. Here are the due diligence steps:

• Establish a due diligence team . Assign experts in the functional areas under investigation. External advisors help fill experience gaps in unknown industries.
• Analyze the target business . Perform valuation analysis. Identify synergies, cost-reduction opportunities, risks, and integration challenges.
• Review DD data . Finalize due diligence reports, including financial modeling projections, legal findings, synergy realization plans, and PMI considerations. 

Once due diligence is complete, two companies prepare to close the transaction and sign a purchase agreement. Here are the deal-closing steps:

• Complete deal closure procedures before the final agreement . It may be financing agreements, shareholder and regulatory approvals, environmental permits, employee contracts, etc.
• Finalize the purchase and sale agreement . Review and approve deal terms in the definitive agreement. A potential buyer may renegotiate deal terms if they reveal critical issues or reevaluate expectations. It happens in 20% – 30% of transactions , according to Morgan & Westfield.
• Arrange the payment . An acquiring company may close an all-cash, all-stock, or a mixed payment. All-cash deals are typical amidst market uncertainty. For instance, all-cash deals comprised 73% of the 2020 deal volume . 
• Complete change of control . Transfer assets, liabilities, intellectual property, and take leadership of the acquired company.

At the post-merger integration stage, a company realizes synergies, increases cash flows, optimizes supply chains, and realizes other projected benefits of the merger. Here are the key integration steps:

• Develop a PMI program . It defines the transaction’s value drivers and outlines the ways to achieve merger benefits, such as technology and cultural integration, production efficiencies, HR optimizations, etc. 
• Develop a PMI timeline & work plan . Create an integration timeline and outline milestones, KPIs, and deadlines.
• Complete PMI . Coordinate and supervise functional teams. Integrate the target company and execute restructuring strategies — join operations, consolidate technology, optimize human resources, merge finances, etc.

• M&A performance indicators

M&A performance indicators allow businesses to track M&A progress, capture issues, and improve post-transaction outcomes.

• Overcoming 3 common M&A transaction process challenges

A Deloitte M&A study reveals that 62% of deals don’t realize integration benefits . Poor M&A results come from the following M&A challenges:

• Improper target identification.
• Weak due diligence.
• Insufficient PMI oversight.

Improper target identification

Correct target identification and accurate valuations comprise 32% of M&A success factors, based on Deloitte’s M&A study. However, several challenges occur along the way.

✅ Solution:

• Conduct a thorough self-assessment . Evaluate your weaknesses, strengths, and capabilities as part of M&A planning. Review your company’s competitive, legal, and regulatory landscape to ensure strategic alignment of the deal.
• Involve financial advisors early . Deal-sourcing assistance and integration cost evaluations from investment bankers are preferable at early M&A transaction phases. Advisors help an acquirer gauge a beneficial deal price.

Weak due diligence

According to Bain & Company’s M&A study, improper due diligence is the root cause of nearly 60% of M&A failures . Here are the most common DD challenges.

• Create a productive DD environment . Use a virtual data room for M&A to store, share, and analyze due diligence findings. The right software ensures seamless collaboration, boosts productivity, and cuts DD costs.
• Emphasize integrated due diligence . Ensure intense cross-functional collaboration to deliver interconnected, value-driven DD findings.

Insufficient PMI oversight

Up to 90% of mergers fail at the post-merger integration stage due to the following challenges.

• Facilitate continuous stakeholder communication . Weekly meetings are optimal for strategic units, such as M&A committees (integration committees). It helps executives address differences in strategic vision, conflicts of interest, and misunderstandings.
• Establish a dedicated PMI unit. It may include a managerial team and dedicated functional teams executing day-to-day integration tasks. It helps alleviate execution imbalances when a company prioritizes PMI over business continuity or vice versa.
• Ensure M&A strategy success using virtual data rooms

Virtual data rooms (VDRs) are secure digital repositories with powerful M&A capabilities. VDRs enhance outcomes during all M&A process phases with the following benefits:

• Efficient decision-making . Q&A workflows, approval workflows, and activity dashboards allow deal parties and external advisors to communicate ideas and make decisions in one place. Collaborative roles make it easier to build a vertical decision-making structure and oversee M&A activities.
• Sound due diligence . VDRs provide unlimited data storage with bulk actions, automatic indexing, audit trail, reporting, version control, and full-text search. These capabilities simplify data collection and analytical tasks during due diligence.
• Ironclad cybersecurity . Zero-trust security with role-based access and information rights management (IRM) tools helps businesses stay compliant and reduce data breach risks. You can have full control of information rights across the workspaces and connected devices.

Based on our experience, dealmakers improve the VDR experience and reduce total M&A technology costs if they carefully choose M&A data room providers . Check our top five VDR profiles below.

• The bottom line
• There are five key steps in the M&A process: preparation, negotiations, due diligence, deal closing, and post-merger integration.
• Most deals fail due to incorrect target identification, weak due diligence, and poor integration.
• Thorough M&A planning, integrated due diligence, and well-coordinated effort of all stakeholders help businesses overcome common M&A challenges.
• Virtual data rooms are crucial for accurate due diligence, effective communication, and security compliance. Robust VDR security helps dealmakers comply with data management regulations.
• M&A process checklist: 5 key stages

Elisa Cline

Elisa is a marketing specialist with 15 years of experience. She worked for many VDR brands and gained insider knowledge of the industry.

At DataRooms.org, Elisa conducts marketing research, develops content plans, supervises content teams, and develops VDR review methodology. She envisions her mission as distributing accurate knowledge of virtual data rooms.

“My mission is to deliver accurate and relevant knowledge of virtual data rooms to as many people as possible.”

Related posts

A dealmaker’s toolkit: evaluating the best m&a software options, data room security: how to protect your confidential data, operational due diligence checklist: tool for smart investments.

• What is an M&A Deal Structure?
• Basics of an M&A Deal Structure
• Ways of Structuring an M&A Deal

Modeling Deal Structures

• Creating a Proper M&A Deal Structure

Related Readings

M&a deal structure.

A binding agreement that outlines the rights and obligations of both parties in an M&A deal

What is an M&A Deal Structure?

An M&A deal structure is a binding agreement between parties in a merger or acquisition (M&A) that outlines the rights and obligations of both parties. It states what each party of the merger or acquisition is entitled to and what each is obliged to do under the agreement. Simply put, a deal structure can be referred to as the terms and conditions of an M&A.

• An M&A deal structure is one of the steps in a merger or acquisition. It is important to create a proper deal structure, taking the top-priority objectives of the parties involved into account.
• There are three well-known methods of M&A deal structuring: asset acquisition, stock purchase, and merger, each with its own merits and potential drawbacks for both parties in the proposed deal.
• A proper deal structure will lead to a successful merger or acquisition deal.

Basics of an M&A Deal Structure

Mergers and acquisitions involve the coming together (synergizing) of two business entities to become one for economic, social, or other reasons. A merger or acquisition is possible only when there is a mutual agreement between both parties. The agreed upon terms on which these entities are willing to come together are known as an M&A deal structure.

Deal structuring is a part of the M&A process ; it is one of the steps that must be taken in a merger or acquisition. It is the process of prioritizing the objectives of a merger or acquisition and ensuring that the top-priority objectives of all parties involved are satisfied, along with considering the weight of risk each party must bear. Initiating the deal structuring process requires all parties involved to state:

• Their stance on the negotiation ;
• Observable latent risks and how they could be managed;
• How much risk they can tolerate; and
• Conditions under which negotiations may be canceled.

Developing a proper M&A deal structure can be quite complicated and challenging because of the number of factors to be considered. These factors include preferred financing means, corporate control, business plan, market conditions, antitrust laws , accounting policies, etc. Employing the right kind of financial, investment, and legal advice can make the process less complicated.

Ways of Structuring an M&A Deal

There are three well-known traditional ways of structuring a merger acquisition deal although, in recent times, business entities have engaged in other, more creative and flexible deal structuring methods. The three traditional ways of structuring an M&A deal are asset acquisition , stock purchase, and mergers. The methods can also be combined to achieve a more flexible deal structure.

1. Asset Acquisition

In an asset acquisition, the buyer purchases the assets of the selling company. An asset acquisition is usually the best deal structure for the selling company if it prefers a cash transaction. The buyer chooses which assets it wants to purchase.

Advantages of an asset acquisition may include:

• The buyer can decide which assets to buy from the seller and which not to.
• The selling company continues as a corporate entity after the sale, containing the remaining unsold assets and liabilities.

Disadvantages of an asset acquisition include:

• The buyer may not be able to acquire non-transferable assets, e.g., goodwill.
• An asset acquisition may lead to high-impact tax costs for both the seller and the buyer.
• It may also take more time to close the deal, compared to other deal structures.

2. Stock Purchase

Unlike an asset acquisition, where there is a direct transaction of assets, assets are not directly transacted in a stock purchase. In a stock purchase acquisition, a majority amount of the seller’s voting stock shares are acquired by the buyer. In essence, it means control of the seller’s assets and liabilities are transferred to the buyer.

Advantages of a stock purchase acquisition:

• Taxes on a stock purchase deal are minimized, especially for the seller.
• Closing a stock purchase deal is less time-consuming since negotiations are less complicated.
• It may be less expensive.

Disadvantages of a stock purchase acquisition:

• Legal or financial liabilities may accompany a stock purchase acquisition.
• Uncooperative minority shareholders may also be a problem.

Though the term “merger” is commonly used interchangeably with “acquisition,” in a strict sense, a merger is the result of an agreement between two separate business entities to come together as one new entity. A merger is typically less complicated than an acquisition because all liabilities, assets, etc. become that of the new entity.

In structuring a deal, the advantages and disadvantages must be considered along with other influencing factors to reach a conclusion on which method to adopt.

Below is a screenshot from CFI’s M&A Model Course , which has an assumptions section that includes various deal structures.

Creating a Proper M&A Deal Structure

To create a great deal structure, aim for a win-win scenario, where the interests of both parties are well represented in the deal and risks are reduced to the barest minimum. Most often, win-win deal structures are more likely to lead to a sealed merger or acquisition deal and may even reduce the time required to complete the M&A process.

There are two important documents that are used to delineate the M&A deal structuring process. They are the Term Sheet and Letter of Intent (LOI).

• Term Sheet : A Term Sheet is a document stating the terms and conditions of an intended financial investment, in this case, a merger or acquisition. Term sheets generally are legally binding unless otherwise stated by the parties involved.
• Letter of Intent (LOI) : As the name implies, a Letter of Intent (LOI) is a document outlining the understanding between two or more parties that they intend to formalize later in a legally binding agreement. Like the term sheet, an LOI is usually not intended to be legally binding except for the binding provisions included in the document.

CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources below:

• Definitive Purchase Agreement
• M&A Considerations and Implications
• Share Exchange Ratio
• Types of Mergers
• See all valuation resources
• See all equities resources
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How To Write an Acquisition Business Plan

In the world of business, acquiring another company is a bold move. It’s a venture filled with both opportunities and risks. To navigate this complex journey successfully, you need a well-structured acquisition business plan. This isn’t just any document; it’s your guiding star, your blueprint, and your key to making this business acquisition a triumphant success.

Acquiring a business is no small feat. It’s a defining moment in the life of any company, and the acquisition business plan is the compass that will lead you through this challenging journey. In this guide, we will not only emphasize the significance of having a comprehensive plan but also provide you with an in-depth understanding of the critical elements that should be present in your plan.

What is Acquisition Planning?

How to create an acquisition business plan step by step, start with an executive summary, get to know your company, understand the industry, evaluate the target business, lay out your acquisition strategy, your marketing and sales game plan, crunch the numbers, deal with potential risks, navigate legal and regulatory matters, meet the team, merger and acquisition business plan template, optimizing a business acquisition plan with structured processes, making it work together, sharing the secrets, one size fits all, more bang for your buck, what makes you special, the big picture.

Acquisition planning is a structured process for identifying and acquiring goods or services to meet an organization’s needs. It is a critical part of the procurement process, as it helps to ensure that the organization gets the best value for its money.

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The executive summary is like the opening scene of a blockbuster movie – it sets the tone and captures the audience’s attention. It’s a concise yet impactful overview of your acquisition strategy. This section serves as the very first impression potential investors and partners will have of your plan.

In your executive summary, include key highlights such as the purpose of the acquisition, the target business, and the expected benefits. Remember, it should be captivating, informative, and compelling.

In the ‘Get to Know Your Company’ section, you provide an extensive profile of your own organization. This is your opportunity to showcase your strengths, experience, and financial stability. It’s essentially the part where you introduce yourself before a crucial presentation.

Outline your company’s history, achievements, and expertise. Explain why your company is the right entity for this acquisition. Make sure to instill confidence in the minds of your readers and potential stakeholders.

An acquisition is not just about buying another company; it’s about entering a new landscape. Understanding the industry in which your target business operates is crucial.

Here, you need to delve deep into the industry. Share insights about market trends, potential for growth, and any challenges that might be on the horizon. This section serves as evidence that you’ve done your homework and are prepared for what lies ahead.

Let’s talk about the business you plan to acquire. In this part of your business plan , it’s your chance to discuss the target business in detail. This includes its history, financial performance, and the assets it brings to the table.

Highlight the aspects of the target business that are promising, and also acknowledge where improvements can be made. This demonstrates your realistic approach and your clear vision for the future.

This is where you outline your plan for acquiring the target business. Your strategy should include the deal structure, financing details, and a clear timeline. Explain how you intend to integrate the newly acquired business into your existing operations seamlessly.

In this section, it’s essential to exhibit your strategic thinking and your ability to execute the acquisition effectively.

Once the acquisition is complete, what’s your strategy for marketing and selling? How will you use this new addition to your portfolio to grow your customer base and, consequently, your revenue?

This part of your plan should outline your marketing and sales strategies post-acquisition. It’s the place to showcase your vision for the future and your ability to drive results.

This is where the hard numbers come into play. Provide detailed financial projections, including income statements, balance sheets, and cash flow forecasts. These projections should offer a clear picture of the expected financial benefits of the acquisition.

These figures are not just dry statistics; they are the financial backbone of your plan, demonstrating the potential return on investment.

Every business venture comes with its share of risks. In this section, you should identify potential risks associated with the acquisition and explain how you plan to address them.

This shows your meticulousness and your commitment to risk mitigation, which is crucial for building trust and confidence among your stakeholders.

Acquisitions often involve complex legal and regulatory matters. It’s essential to discuss these aspects in your plan. If there are compliance issues, explain in detail how you intend to address them.

This section assures your readers that you’re well-prepared to navigate the legal intricacies involved in the acquisition.

A successful acquisition is a team effort. Introduce the key players involved in the acquisition and explain their roles. Highlight their experience, qualifications, and achievements.

By showcasing the strength of your team, you demonstrate that you have the right people in place to execute the plan effectively.

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Grab our Merger and Acquisition Business Plan Template to make your merger or acquisition journey smoother. This template is packed with key sections and detailed insights, ensuring you cover all aspects of your acquisition strategy. Let this template be your roadmap as you navigate the complexities of business acquisitions. Start your journey toward a triumphant merger or acquisition business plan today! Download M&A Business Plan Template

Crafting a business acquisition plan isn’t just about signing papers; it’s about blending smart strategies that supercharge success. By weaving organized methods into this plan, you’re making sure that the merging companies don’t just coexist but flourish together.

Think of it as putting puzzle pieces together. Show how a carefully planned approach isn’t just about buying a company; it’s about merging their ways of doing things into a cohesive strategy. This part is about combining different systems, rules, and methods smoothly.

Talk about finding and using the best ways of doing things from the company you’re acquiring. Explain how mixing their successful methods with yours makes everything run smoother and more efficiently.

Show why having a set way of doing things helps. Discuss how having consistent methods, from handling money to everyday tasks, helps the new company grow without unnecessary overlaps.

Explain how having a well-thought-out plan gets you more than just a new company—it increases your profits too. Highlight how bringing in smart strategies boosts how well the business works and makes it stronger.

Talk about the advantage you have—the ability to look at different ways companies work. Explain how this helps you find and use the best ideas, making all your businesses better.

Wrap it up by saying this plan isn’t just a bunch of papers—it’s a map to a successful future. It brings together the best parts of different companies, wipes out any problems, and sends everyone toward success.

In the concluding section of your plan, summarize the key points. Emphasize the potential for success that your acquisition business plan represents. Leave your readers with confidence in your approach and a sense of optimism about the future.

In conclusion, an acquisition business plan is more than just a document; it’s the heart and soul of your acquisition strategy. A meticulously crafted plan, like the one described here, can be your key to not only a successful acquisition but also a confident and prosperous future in the complex world of business acquisitions.

By following these steps and adding depth to each section of your plan, you can create a compelling narrative that instills trust and confidence in your stakeholders. This detailed roadmap will position you to excel in the intricate and rewarding realm of business acquisitions.

What is acquisition in business strategy?

An acquisition is a business deal where one company acquires and assumes control of another company. These transactions are a fundamental component of mergers and acquisitions (M&A), which represents a professional field in corporate law and finance centered on the acquisition, sale, and merging of businesses.

What is acquisition in business example?

An acquisition is a business deal in which one company obtains companies, organizations, or their assets in exchange for some form of consideration from another company. Examples of such transactions include Google’s purchase of Android for $50 million in 2005 and Pfizer’s acquisition of Warner-Lambert for $90 billion in 2000.

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What Is Merger and Acquisition (M&A)?

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

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Table of contents, what are mergers and acquisitions (m&a).

Mergers and acquisitions (M&A) is the consolidation of companies or assets through various financial transactions.

In a merger, two or more companies merge their operations and become one entity. On the other hand, in an acquisition, one company acquires another company, and the acquired company becomes a subsidiary of the acquiring company.

Mergers and acquisitions are often pursued for various reasons. This could be for expanding market share, achieving economies of scale, diversifying operations, and gaining access to new technologies or markets.

These transactions can also be used to increase profits by eliminating redundancies, reducing costs, and increasing revenue streams.

Mergers and acquisitions can take many forms, including horizontal mergers where two companies in the same industry combine their operations, and vertical mergers where a company acquires a supplier or a customer, among others.

The M&A process involves several steps, including identifying potential targets, conducting due diligence, negotiating the terms of the transaction, obtaining regulatory approvals , and integrating the companies after the merger or acquisition is complete.

Reasons for Mergers and Acquisitions (M&A)

There are several reasons why companies engage in M&A:

One of the primary reasons companies pursue M&A is to achieve growth. Acquiring or merging with another company allows businesses to increase their size, market presence, and revenue streams. They can acquire established brands and distribution networks.

This can be particularly useful for companies that have reached a plateau in their growth trajectory or those looking to expand into new markets. M&A can provide a faster and more efficient path to growth than organic expansion, which can be slow and costly.

Diversification

Diversification permits a company in a different industry or product line to reduce its dependence on a single market or product, thereby spreading its risk and increasing its resilience to economic downturns.

Moreover, diversification can also provide companies with a competitive advantage. By offering a wider range of products or services, companies can differentiate themselves from competitors and build stronger customer relationships .

When two companies merge, they can leverage their complementary strengths to create value that is greater than the sum of their parts. This can be achieved through cost savings, improved efficiency, and the ability to offer a wider range of products or services to customers.

Merging companies can eliminate redundant functions, consolidate operations, and reduce overhead costs . In addition, combining purchasing power and negotiating better deals with suppliers can lead to lower costs for raw materials, components, and other inputs.

Market Share

Acquiring a competitor is a common strategy for companies looking to increase their market share and gain a competitive advantage. This can be particularly beneficial in industries with high barriers to entry or limited growth prospects.

Companies can achieve economies of scale and improve their bargaining power with suppliers and customers. Eliminating a competitor increases a company's share of the market and reduces competition, which can lead to higher pricing power and increased profitability.

Profitability

Companies can acquire a company that is more profitable or has higher margins to increase their earnings and improve their financial performance. This provides access to new markets, customers, and product lines, which can create new growth opportunities and increase revenue.

Lower costs, such as those resulting from higher productivity, can lead to an increase in profits. As a result, consumers may benefit from lower prices, leading to an overall improvement in economic welfare.

Types of Mergers and Acquisitions (M&A)

The following lists the different types of mergers and acquisitions:

In essence, other corporate entities are integrated into an existing entity. This can be beneficial for smaller companies that merge into larger companies with stronger brand recognition and greater market traction.

Acquisition

Acquisition is a type of business merger that takes place when one company purchases a majority or all of another company's shares. When a company acquires more than 50% of the target company's shares, it gains control of the company.

Consolidation

Consolidation involves merging the core businesses of two companies and forming a new one. The shareholders of both companies must give their approval. Once approved, they receive common equity shares in the new company, and the old corporate structures are abandoned.

Tender Offer

A tender offer is a transaction where one company offers a premium price to the shareholders in order to acquire a controlling stake in the company.

The acquiring company directly communicates the offer to the shareholders of the target company, thereby bypassing the involvement of the management and board of directors.

Acquisition of Assets

This happens when one company purchases a specific set of assets from another company. This type of M&A is often used to acquire specific technologies, intellectual property, or other assets that are strategically important to the acquiring company.

Management Acquisition

Also known as Management buyout (MBO), this is a form of acquisition in which a group led by the current management of a company acquires a majority of the company's shares from existing shareholders, resulting in the management taking control of the company.

Forms of Mergers

The list below presents the various forms of mergers:

Horizontal Merger

This happens when two companies in the same industry or sector merge, typically with the aim of achieving economies of scale, increasing market share, and reducing competition.

This type of merger is common in mature and consolidated industries, such as the automotive or telecommunications industry.

Vertical Merger

Vertical mergers, on the other hand, occur when companies in different stages of the same supply chain merge.

For example, a car manufacturer merges with a tire producer. This type of merger aims to streamline production processes, reduce costs, and increase control over the supply chain.

Congeneric Merger

Congeneric mergers involve companies that are in the same general industry but with different product lines. This type of merger aims to leverage complementary strengths and combine product lines to enhance market penetration and customer reach.

Conglomerate Merger

Conglomerate mergers involve companies from different industries that have little to no overlap. The objective of this type of merger is often to diversify the portfolio of the acquiring company, reducing risks and increasing resilience to economic downturns.

Reverse Merger

A reverse merger enables a private company to become public without incurring the expensive costs and regulatory requirements associated with an initial public offering (IPO) . They acquire or merge with a pre-existing public company and install their own management team.

Accretive Merger

Accretive mergers increase the earnings per share of the acquiring company. The profits generated by the company being acquired increase the market value of the acquiring company. However, whether the transaction is considered accretive or not can change as time goes on.

Dilutive Merger

Dilutive mergers are the opposite of accretive mergers in that the transaction decreases the earnings per share of the acquiring company.

This merger sacrifices short-term profitability to create value in the long run, such as when a slow-growing company buys a high-growth company.

Valuing Mergers and Acquisitions (M&A)

Valuing a target company is an essential aspect of the process. There are various methods that can be used to determine the value of a company.

Price-To-Earnings Ratio (P/E Ratio)

The P/E Ratio results indicate the number of years it would take for the acquiring company to recover its investment . It provides an indication of the market's expectations of the future earnings potential of a company.

A high P/E Ratio typically indicates that the market expects the company's earnings to grow significantly in the future, while a low P/E Ratio may indicate that the market is pessimistic about the company's future earnings potential.

Enterprise-Value-To-Sales Ratio (EV/Sales)

This method allows the acquiring company to see the amount it pays per dollar of sales. This determines whether a company is overvalued or undervalued based on its revenue.

The EV/Sales ratio can also be used as a quick and simple measure of a company's valuation in comparison to others in the same industry. However, it does not take into account factors such as profit margins , growth prospects, and other financial metrics.

Discounted Cash Flow (DCF)

DCF involves projecting future cash flows and discounting them to their present value, taking into account the time value of money . This method is more complex and takes into consideration the company's growth rate, cost of capital , and other factors that may impact future cash flows.

It is widely regarded as the most accurate method of valuing companies, but it requires a higher degree of analysis and judgment, and its accuracy is highly dependent on the assumptions made about future cash flows.

Replacement Cost

Sometimes, acquisitions are based on the cost of replacing the target company. Assuming that the value of a company is equal to the sum of all its equipment and staffing costs, then the acquiring company estimates the cost of replacing assets or rebuilding a company from scratch.

The approach of setting a price based on equipment and staffing costs would be less applicable in a service industry, where the primary assets such as people and ideas are difficult to evaluate and cultivate.

Mergers and Acquisitions (M&A) Process

The M&A process involves several phases:

Assessment and Preliminary Review

The first phase of the M&A process involves an assessment of the acquiring company's strategic goals, target market, and potential acquisition targets.

This phase includes a preliminary review of potential targets to determine whether they meet the company's acquisition criteria.

On the other hand, if no buyer has been identified, it is common practice to start with an information memorandum. The vendor typically creates the memorandum to gauge market interest and sell their company.

Deal Structuring and Negotiation

Once a potential target has been identified, the second phase involves deal structuring and negotiation. This phase also involves determining the deal structure, price, terms of the transaction, assessing competition, and antitrust law implications.

Additionally, parties may review employment law considerations, licensing matters, and the fiscal implications of the transaction, among other relevant factors.

It is also common for the potential purchaser and vendor to draft a letter of intent outlining proposed terms and conditions.

Due Diligence

This phase involves a detailed review of the target company's financial, legal, and operational information. Due diligence helps to identify liabilities and synergies associated with the transaction.

During the due diligence phase, which may cover legal, financial, and fiscal areas, the primary objective is to identify significant risks that may arise from the potential merger or acquisition. This exercise is conducted to determine fair pricing and increase bargaining power.

Signing and Closing

The fourth phase includes drafting and executing the purchase agreement, financing the transaction, and obtaining regulatory approvals. The timing, legal compliance, and communication with stakeholders must be considered.

Warranty, indemnity, and limitation details must be disclosed. Working with legal and financial advisors in the drafting and review process and creating a detailed plan for post-closing integration is recommended.

Post-Merger Integration

Post-merger integration involves integrating the target company into the acquiring company's operations, culture, and systems. They should identify and address cultural differences, manage employee and stakeholder expectations, and realize synergies.

A detailed integration plan, appointing a dedicated integration team, and communicating transparently with stakeholders should be part of the process. Additionally, it is important to consider the tax implications and regulatory requirements.

Challenges and Risks of Mergers and Acquisitions (M&A)

In order to guarantee a successful transaction, it is important to understand these challenges and risks and develop strategies to mitigate them.

Communication Challenges

It is essential that both parties communicate effectively throughout the process to ensure that there is a shared understanding of the transaction, its goals, and the potential risks involved. Failure to do so can result in misunderstandings, delays, and, ultimately, a failed deal.

During mergers and acquisitions, employees and management are often not given enough information about the process, causing fear and uncertainty. This lack of transparency creates a sense of distrust and uncertainty in the workplace.

Employee Retention

When two companies merge, there can be a sense of doubt among employees, leading to anxiety and fear about job security. Companies must ensure that they have a comprehensive plan in place to communicate with employees and provide support during the transition period.

Employees tend to lose faith and perceive their leaders as having betrayed them. It is crucial to keep employee turnover to a minimum during the merger process to ensure business continuity and reap the rewards of the merger.

Cultural Risks

Cultural risks are also a major challenge. Two companies with different cultures cause clashes that lead to decreased morale and lower productivity. M&A often results in changes to management practices and strategies, which can have adverse effects on employees.

Cultural differences should be identified early on in the process, and develop strategies to align the two cultures. This can include creating a cross-functional team, developing a plan to integrate the two cultures, and providing training to employees on the new culture.

Benefits of Mergers and Acquisitions (M&A)

Mergers and acquisitions can offer a variety of benefits to companies:

Economies of Scale

Combining operations and resources allow companies to increase efficiency and reduce costs. This can result in higher profit margins and improved competitiveness in the market. This enables them to achieve and realize economic gains and economies of scale .

Due to the reduced costs, companies can lower their prices, making their products or services more affordable and attractive to customers. This leads to an increased market share and higher sales volume.

Another benefit of M&A is the potential for synergies. By bringing together complementary strengths and capabilities, companies can create new opportunities for innovation and growth. This can lead to the development of new products or services.

Synergies are achieved through the integration of similar business processes, sharing of best practices, and elimination of redundant costs. This results in greater efficiency and productivity, ultimately leading to cost savings.

Market Expansion

M&A can also enable companies to expand their market reach. Companies can enter new markets and reach new customers by acquiring or merging with a company in a different geographic region or industry. This can help to diversify their revenue streams.

This reduces the risks and costs associated with entering a new market from scratch. M&A can also provide access to new distribution channels, suppliers, and partners that can further enhance a company's market expansion strategy.

Increased Market Power

Finally, M&A can increase market power by consolidating market share. This can result in greater pricing power and improved profitability. After all, competing against larger companies can be more challenging.

In addition, companies can benefit from reduced competition, which can lead to higher profit margins and increased trading power. Companies can invest more in research and development, marketing, and other areas to stay ahead of the competition.

Final Thoughts

Mergers and acquisitions involve combining companies or assets through different financial transactions. Mergers and acquisitions play a significant role in shaping the business landscape and can have far-reaching implications for companies, investors, and consumers.

Companies engage in M&A for various reasons, such as growth diversification and competitive advantage. There are different ways for companies to combine. This can be through a merger, acquisition, consolidation tender offer, or management acquisition.

The form of merger also varies depending on the needs of the companies. They could engage in a horizontal merger, vertical merger, congeneric merger, or conglomerate merger, among others. Companies should carefully consider their options before moving forward.

Valuing the companies or assets involved in an M&A transaction is a critical step in determining success. They can use the price-to-earnings ratio, enterprise-value-to-sales ratio, discounted cash flow, or replacement cost.

The process of merging involves a great deal of legal and financial considerations. Companies should work with financial advisors and review the terms of the merger agreement to ensure that their interests are protected.

M&A deals can lead to numerous benefits for companies, including increased economies of scale, cost savings, synergies, market expansion, and increased market power. However, they should also be aware of the risks involved.

Proceeding with M&A poses communication challenges, employee retention issues, and cultural risks. These concerns should be addressed early on to ensure and maximize the success of the transaction.

Mergers and Acquisitions (M&A) FAQs

What is the difference between a merger and an acquisition.

A merger is a type of business combination where two companies come together to integrate each other in their company. In contrast, an acquisition is a transaction where one company buys another company to either combine or operate separately.

What are some common reasons for companies to merge or acquire another company?

Companies engage in M&A for various reasons, such as growth diversification, synergy, increased market share, and profitability.

How does a company determine the value of another company in a merger or acquisition?

When considering a merger or acquisition, determining the value of the target company is crucial. There are several methods used to assess the value of a company, including the Price-To-Earnings Ratio (P/E Ratio), Enterprise-Value-To-Sales Ratio (EV/Sales), Discounted Cash Flow (DCF), and Replacement Cost.

What are some potential risks for companies involved in a merger or acquisition?

The potential risks include communication problems, concerns about employee retention, and dealing with cultural differences between the two organizations.

How can shareholders be affected by a merger or acquisition?

The acquiring company may offer to buy the target company's shares at a premium, resulting in a windfall for shareholders of the target company. However, in other cases, the acquiring company may use its own shares as currency to pay for the acquisition, which could dilute the value of the target company's shares. Additionally, the announcement of a merger or acquisition can lead to significant fluctuations in the share prices of both the acquiring and target companies, which can result in gains or losses for shareholders.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Mergers and Acquisitions (M&A): Types, Structures, Valuations

• Search Search Please fill out this field.
• Mergers and Acquisitions (M&A)
• Understanding M&As
• Different Types

How Mergers Are Structured

How acquisitions are financed.

• Valuing Mergers and Acquisitions

Frequently Asked Questions

• Mergers and Acquisitions FAQs

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

• Mergers and Acquisitions (M&A): Types, Structures, Valuations CURRENT ARTICLE
• Acquisition
• Why Do Companies Merge With or Acquire Other Companies?
• How M&A Can Affect a Company
• What's the Difference Between Mergers and Acquisitions?
• What You Should Know About Corporate Mergers
• Inorganic Growth
• Merger vs. Takeover
• Takeover Bid
• Hostile Takeover
• Hostile Takeovers vs. Friendly Takeovers
• What Are Some of the Top Hostile Takeovers of All Time?
• How Can a Company Resist a Hostile Takeover?
• Poison Pill
• Reverse Takeover
• Reverse Mergers: Advantages and Disadvantages
• Reverse Triangular Merger
• A Guide to Spotting a Reverse Merger
• How Does a Merger Affect Shareholders?
• How Company Stocks Move During an Acquisition
• What Happens to Call Options If a Company Is Bought?
• Stock-for-Stock Merger
• All Cash, All Stock Offer
• Acquisition Premium
• Exchange Ratio
• SEC Form S-4
• Special Purpose Acquisition Company (SPAC)
• Understanding Leveraged Buyout Scenarios
• Vertical Merger
• Horizontal Merger
• Conglomerate Merger
• Roll-Up Merger
• The Five Biggest Mergers in History
• The 5 Biggest Acquisitions in History
• 4 Cases When M&A Strategy Failed for the Acquirer

What Are Mergers and Acquisitions (M&A)?

The term mergers and acquisitions (M&A) refers to the consolidation of companies or their major business assets through financial transactions between companies. A company may purchase and absorb another company outright, merge with it to create a new company, acquire some or all of its major assets, make a tender offer for its stock, or stage a hostile takeover. All are M&A activities .

The term M&A also is used to describe the divisions of financial institutions that deal in such activity.

Key Takeaways

• The terms "mergers" and "acquisitions" are often used interchangeably, but they differ in meaning.
• In an acquisition, one company purchases another outright.
• A merger is the combination of two firms, which subsequently form a new legal entity under the banner of one corporate name.
• A company can be objectively valued by studying comparable companies in an industry and using metrics.

What's an Acquisition?

Understanding mergers and acquisitions.

The terms mergers and acquisitions are often used interchangeably, however, they have slightly different meanings .

When one company takes over another and establishes itself as the new owner, the purchase is called an acquisition.

On the other hand, a merger describes two firms, of approximately the same size, that join forces to move forward as a single new entity, rather than remain separately owned and operated. This action is known as a merger of equals . Case in point: Both Daimler-Benz and Chrysler ceased to exist when the two firms merged , and a new company, DaimlerChrysler, was created. Both companies' stocks were surrendered, and new company stock was issued in its place. In a brand refresh, the company underwent another name and ticker change to the Mercedes-Benz Group AG (MBG) in February 2022.

A purchase deal will also be called a merger when both CEOs agree that joining together is in the best interest of both of their companies.

Unfriendly or hostile takeover deals, in which target companies do not wish to be purchased, are always regarded as acquisitions. A deal can be classified as a merger or an acquisition based on whether the acquisition is friendly or hostile and how it is announced. In other words, the difference lies in how the deal is communicated to the target company's board of directors , employees, and shareholders .

Lara Antal/Investopedia

M&A deals generate sizable profits for the investment banking industry, but not all mergers or acquisition deals close.

Types of Mergers and Acquisitions

The following are some common transactions that fall under the M&A umbrella.

In a merger, the boards of directors for two companies approve the combination and seek shareholders' approval. For example, in 1998, a merger deal occurred between the Digital Equipment Corporation and Compaq, whereby Compaq absorbed the Digital Equipment Corporation. Compaq later merged with Hewlett-Packard in 2002. Compaq's pre-merger ticker symbol was CPQ. This was combined with Hewlett-Packard's ticker symbol (HWP) to create the current ticker symbol (HPQ).

Acquisitions

In a simple acquisition, the acquiring company obtains the majority stake in the acquired firm, which does not change its name or alter its organizational structure. An example of this type of transaction is Manulife Financial Corporation's 2004 acquisition of John Hancock Financial Services, wherein both companies preserved their names and organizational structures. The target company may require the buyers to promise that the target business remains solvent for a period after acquisition through the use of a whitewash resolution .

Consolidations

Consolidation creates a new company by combining core businesses and abandoning the old corporate structures. Stockholders of both companies must approve the consolidation, and subsequent to the approval, receive common equity shares in the new firm. For example, in 1998, Citicorp and Travelers Insurance Group announced a consolidation, which resulted in Citigroup.

Tender Offers

In a tender offer, one company offers to purchase the outstanding stock of the other firm at a specific price rather than the market price. The acquiring company communicates the offer directly to the other company's shareholders, bypassing the management and board of directors. For example, in 2008, Johnson & Johnson made a tender offer to acquire Omrix Biopharmaceuticals for $438 million. The company agreed to the tender offer and the deal was settled by the end of December 2008.

Acquisition of Assets

In an acquisition of assets, one company directly acquires the assets of another company. The company whose assets are being acquired must obtain approval from its shareholders. The purchase of assets is typical during bankruptcy proceedings, wherein other companies bid for various assets of the bankrupt company, which is liquidated upon the final transfer of assets to the acquiring firms.

Management Acquisitions

In a management acquisition, also known as a management-led buyout (MBO) , a company's executives purchase a controlling stake in another company, taking it private. These former executives often partner with a financier or former corporate officers in an effort to help fund a transaction. Such M&A transactions are typically financed disproportionately with debt, and the majority of shareholders must approve it. For example, in 2013, Dell Corporation announced that it was acquired by its founder, Michael Dell .

Mergers can be structured in a number of different ways, based on the relationship between the two companies involved in the deal:

• Horizontal merger : Two companies that are in direct competition and share the same product lines and markets .
• Vertical merger : A customer and company or a supplier and company. Think of an ice cream maker merging with a cone supplier.
• Congeneric mergers : Two businesses that serve the same consumer base in different ways, such as a TV manufacturer and a cable company.
• Market-extension merger : Two companies that sell the same products in different markets.
• Product-extension merger : Two companies selling different but related products in the same market.
• Conglomeration : Two companies that have no common business areas.

Mergers may also be distinguished by following two financing methods, each with its own ramifications for investors.

Purchase Mergers

As the name suggests, this kind of merger occurs when one company purchases another company. The purchase is made with cash or through the issue of some kind of debt instrument. The sale is taxable, which attracts the acquiring companies, who enjoy the tax benefits. Acquired assets can be written up to the actual purchase price, and the difference between the book value and the purchase price of the assets can depreciate annually, reducing taxes payable by the acquiring company.

Consolidation Mergers

With this merger, a brand new company is formed, and both companies are bought and combined under the new entity. The tax terms are the same as those of a purchase merger.

A company can buy another company with cash, stock, assumption of debt, or a combination of some or all of the three. At times, the investment bank involved in the sell of one company might offer financing to the buying compnay. This is known as staple financing and is done to produce larger and timely bids.

In smaller deals, it is also common for one company to acquire all of another company's assets. Company X buys all of Company Y's assets for cash, which means that Company Y will have only cash (and debt, if any). Of course, Company Y becomes merely a shell and will eventually liquidate or enter other areas of business.

Another acquisition deal known as a reverse merger enables a private company to become publicly listed in a relatively short time period. Reverse mergers occur when a private company that has strong prospects and is eager to acquire financing buys a publicly listed shell company with no legitimate business operations and limited assets. The private company reverses merges into the public company , and together they become an entirely new public corporation with tradable shares.

How Mergers and Acquisitions Are Valued

Both companies involved on either side of an M&A deal will value the target company differently. The seller will obviously value the company at the highest price possible, while the buyer will attempt to buy it for the lowest price possible. Fortunately, a company can be objectively valued by studying comparable companies in an industry, and by relying on the following metrics.

Price-to-Earnings Ratio (P/E Ratio)

With the use of a price-to-earnings ratio (P/E ratio) , an acquiring company makes an offer that is a multiple of the earnings of the target company. Examining the P/E for all the stocks within the same industry group will give the acquiring company good guidance for what the target's P/E multiple should be.

Enterprise-Value-to-Sales Ratio (EV/Sales)

With an enterprise-value-to-sales ratio (EV/sales) , the acquiring company makes an offer as a multiple of the revenues while being aware of the price-to-sales (P/S ratio) of other companies in the industry.

Discounted Cash Flow (DCF)

A key valuation tool in M&A, a discounted cash flow (DFC) analysis determines a company's current value, according to its estimated future cash flows. Forecasted free cash flows (net income + depreciation/amortization (capital expenditures) change in working capital) are discounted to a present value using the company's weighted average cost of capital (WACC) . Admittedly, DCF is tricky to get right, but few tools can rival this valuation method.

Replacement Cost

In a few cases, acquisitions are based on the cost of replacing the target company. For simplicity's sake, suppose the value of a company is simply the sum of all its equipment and staffing costs. The acquiring company can literally order the target to sell at that price, or it will create a competitor for the same cost.

Naturally, it takes a long time to assemble good management, acquire property, and purchase the right equipment. This method of establishing a price certainly wouldn't make much sense in a service industry wherein the key assets (people and ideas) are hard to value and develop.

How Do Mergers Differ From Acquisitions?

In general, "acquisition" describes a transaction, wherein one firm absorbs another firm via a takeover . The term "merger" is used when the purchasing and target companies mutually combine to form a completely new entity. Because each combination is a unique case with its own peculiarities and reasons for undertaking the transaction, the use of these terms tends to overlap.

Why Do Companies Keep Acquiring Other Companies Through M&A?

Two of the key drivers of capitalism are competition and growth. When a company faces competition, it must both cut costs and innovate at the same time. One solution is to acquire competitors so that they are no longer a threat. Companies also complete M&A to grow by acquiring new product lines, intellectual property, human capital, and customer bases. Companies may also look for synergies. By combining business activities, overall performance efficiency tends to increase, and across-the-board costs tend to drop as each company leverages the other company's strengths.

What Is a Hostile Takeover?

Friendly acquisitions are most common and occur when the target firm agrees to be acquired; its board of directors and shareholders approve of the acquisition, and these combinations often work for the mutual benefit of the acquiring and target companies.

Unfriendly acquisitions, commonly known as hostile takeovers, occur when the target company does not consent to the acquisition.

Hostile acquisitions don't have the same agreement from the target firm, and so the acquiring firm must actively purchase large stakes of the target company to gain a controlling interest, which forces the acquisition.

How Does M&A Activity Affect Shareholders?

Generally speaking, in the days leading up to a merger or acquisition, shareholders of the acquiring firm will see a temporary drop in share value. At the same time, shares in the target firm typically experience a rise in value. This is often due to the fact that the acquiring firm will need to spend capital to acquire the target firm at a premium to the pre-takeover share prices.

After a merger or acquisition officially takes effect, the stock price usually exceeds the value of each underlying company during its pre-takeover stage. In the absence of unfavorable  economic conditions , shareholders of the merged company usually experience favorable long-term performance and dividends.

Note that the shareholders of both companies may experience a  dilution  of voting power due to the increased number of shares released during the merger process. This phenomenon is prominent in  stock-for-stock mergers , when the new company offers its shares in exchange for shares in the target company, at an agreed-upon  conversion rate . Shareholders of the acquiring company experience a marginal loss of voting power, while shareholders of a smaller target company may see a significant erosion of their voting powers in the relatively larger pool of stakeholders.

What Is the Difference Between a Vertical and Horizontal Merger or Acquisition?

Horizontal integration and vertical integration are competitive strategies that companies use to consolidate their position among competitors. Horizontal integration is the acquisition of a related business. A company that opts for horizontal integration will take over another company that operates at the same level of the  value chain  in an industry—for instance when Marriott International, Inc. acquired Starwood Hotels & Resorts Worldwide, Inc.

Vertical integration refers to the process of acquiring business operations within the same production vertical. A company that opts for vertical integration takes complete control over one or more stages in the production or distribution of a product. Apple, for example, acquired AuthenTec, which makes the touch ID fingerprint sensor technology that goes into its iPhones.

Daimler. " Company History ."

Mercedes-Benz Group. " Daimler Embarks on a New Era as Mercedes-Benz Group ."

McKinsey & Company. " Done Deal? Why Many Large Transactions Fail to Cross the Finish Line ."

U.S. Securities and Exchange Commission. " Compaq Computer Corporation, Form Q-10, For the Quarterly Period Ended September 30, 1999 ." Page 6.

Hewlett-Packard Company Archives. " A Pact With Compaq ."

Manulife Financial. " Manulife Financial and John Hancock Complete Merger Creating North America’s Second Largest Life Insurance Company ."

Federal Reserve System. " Federal Reserve Press Release, September 23, 1998 ."

U.S. Securities and Exchange Commission. " Tender Offer ."

U.S. Securities and Exchange Commission. " Offer to Purchase for Cash All Outstanding Shares of Common Stock of Omrix Biopharmaceuticals, Inc. at $25.00 Net per Share by Binder Merger Sub, Inc., a Wholly-Owned Subsidiary of Johnson & Johnson ."

Fierce Biotech. " Johnson & Johnson Completes Acquisition of Omrix Biopharmaceuticals, Inc ."

Dell. " Open Letter to Shareholders From Michael Dell ."

Marriott International. " Marriott International Completes Acquisition of Starwood Hotels & Resorts Worldwide, Creating World's Largest and Best Hotel Company While Providing Unparalleled Guest Experience ."

U.S. Securities and Exchange Commission. " AuthenTec, Inc., Form 8-K, July 26, 2012 ."

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Mergers and Acquisitions (M&A) Guide - Combining Companies

Mergers and acquisitions, or M&A for short, involves the process of combining two companies into one. The goal of combining two or more businesses is to try and achieve synergy – where the whole (new company) is greater than the sum of its parts (the former two separate entities).

Mergers and acquisitions, or M&A for short, involves the process of combining two companies into one. The goal of combining two or more businesses is to try and achieve synergy—where the whole (new company) is greater than the sum of its parts (the former two separate entities).

Mergers occur when two companies join forces. Such transactions typically happen between two businesses that are about the same size and which recognize advantages the other offers in terms of increasing sales , efficiencies, and capabilities. The terms of the merger are often fairly friendly and mutually agreed to and the two companies become equal partners in the new venture.

Acquisitions occur when one company buys another company and folds it into its operations. Sometimes the purchase is friendly and sometimes it is hostile, depending on whether the company being acquired believes it is better off as an operating unit of a larger venture.

The end result of both processes is the same, but the relationship between the two companies differs based on whether a merger or acquisition occurred.

Benefits of combining forces

Some of the benefits of M&A deals have to do with efficiencies and others have to do with capabilities, such as:

• Improved economies of scale. By being able to purchase raw materials in greater quantities, for example, costs can be reduced.
• Increased market share. Assuming the two companies are in the same industry, bringing their resources together may result in larger market share.
• Increased distribution capabilities. By expanding geographically, companies may be able to add to their distribution network or expand its geographic service area.
• Reduced labor costs. Eliminating staffing redundancies can help reduce costs.
• Improved labor talent. Expanding the labor pool from which the new, larger company can draw can aid in growth and development.
• Enhanced financial resources. The financial wherewithal of two companies is generally greater than one alone, making new investments possible.

Potential drawbacks

Although mergers and acquisitions are expensive undertakings, there are potential rewards. And there are disadvantages, or reasons not to purchase an acquisition, including:

• Large expenses associated with buying a company, especially if it does not want to be acquired. (If an investor has a controlling interest in another company, however, it may not have a choice regarding whether it is acquired.)
• Higher legal costs, which can be exorbitant if a company does not want to be acquired.
• The opportunity cost of having to forego other deals in order to focus on bringing two companies together.
• The possibility of a negative reaction to a merger or acquisition, which drives the company’s stock price lower.

M&A is a growth strategy corporations often use to quickly increase its size, service area, talent pool, customer base, and resources in one fell swoop. The process is costly, however, so the businesses need to be sure the advantage to be gained is substantial.

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Business acquisitions FAQ

What is meant by business acquisition, what is an example of a business acquisition, what are the types of business acquisitions.

• Merger: When two companies join together to form a single entity.
• Consolidation: When two or more companies join together to form a single entity.
• Acquisition: When one company takes over another company.
• Joint Venture: When two or more companies join forces to pursue a common goal.
• Strategic Alliance: When two or more companies join forces to pursue a common goal, but maintain separate business entities.
• Leveraged Buyout: When an investor or group of investors purchase a company using a combination of debt and equity.
• Management Buyout: When the existing management of a company purchases the company from the current owners.
• Spin-off: When a company separates from its parent company and becomes an independent entity.

How do business acquisitions work?

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Step 9: Develop Project M&A Integration Plans

Post-merger integration plan.

An M&A integration plan outlines exactly how and when major resources, assets, and processes of the acquiring and acquired companies will be combined in order to achieve the goals of the deal. 

Acquirers should follow a proven post-merger integration planning methodology (playbook) to define the steps and activities so that people in both organizations can see the work ahead as logical and achievable.  A clear, carefully crafted post-acquisition integration project plan   helps align expectations and replace employee skepticism with optimism.

In this section of our web site, we provide post-merger integration:

• Presentations about plans for many integration teams including finance, HR, IT, marketing, legal, procurement, culture, and change management
• Plans and playbooks from successful acquisitions
• Presentations that educate teams about the planning and implementation process
• Presentations about cross-border integration planning
• Tools for integration planning including our  eMerger  software that is packed with more than 80 post-merger integration tools 

Our files can be downloaded and easily customized for your acquisitions.

Note: Before you develop your detailed plans, please make sure you have completed Step 1 , Step 2 , and  Step 3 of the integration planning process. 

Plans and Playbooks - All Teams

Finance Planning

HR Planning

IT Planning

Sales and Marketing Planning

Culture and Change Management Planning

Other Team Planning

Educating Teams

Cross-Border Planning

Planning Tools

Post-Merger Integration Plans and Playbooks - All Teams

Executive Summary Synergy Opportunities Integration Framework Integration Process Goals Integration Objectives Integration Program Management Governance Structure and Roles and Responsibilities Phasing & Deliverables Overview Phase 1, 2, and 3 Deliverables. . .

100-Day Integration Plan from $90 Million Acquisition Playbook

This 53-page post-merger integration 100-day plan provides tasks and detailed checklists for these integration work streams:

• Due Diligence
• Human Resources

Communications

Everything is tied together in easily customizable excel spreadsheets that auto-calculate total budget costs and synergies. Plus, the documents auto-display timing of all major activities on Gantt charts.

High-Level Acquisition Integration Plan

Deal Drivers Cost Synergies Opportunities Governance Plan – Organization Chart Governance – Change Control, Line of Sight, Status Reporting Milestone Definitions and Timing Human Resources Plan. . .

M&A Integration Playbook - $10 Billion Acquisition

The free sample pdf is an excerpt from the playbook. The full unredacted playbook in Excel is available to Merger Integration Certification Workshop  attendees and MergerIntegration.com subscribers.

The 61-page M&A integration playbook specifies over 900 integration tasks for the following work streams:

Finance : Treasury | SAP Integration | Financial Close | Operational Reporting | Financial Reporting | Tax | Inventory Accounting | Acquisition Process | Investor Relations | Synergy Tracking | Organization Design

Information Technology ...

Acquisition Integration Playbook

The Acquisition Integration playbook includes the following nine sections:

Acquisition Integration Playbook - $2 Million Acquisition

Lists action items and supplies checklists on:

• Information Technology
• Call Center

Acquisition Integration Playbook - $65 Million Deal

Integration Playbook (22-pages when printed) 

HR - 93 Initiatives Finance - 91 Initiatives IT - 48 Initiatives Manufacturing - 81 Initiatives Sales & Marketing - 25 Initiatives Legal - 43 Initiatives

M&A Integration Playbook - $10 Million Deal

Covers almost 500 tasks for these integration work streams:

• Procurement

M&A Integration Playbook - $5 Million Deal

  Integration Strategy   Project Management   Approach to The Integration Project   Identify Steering Committee and IMO   Relationship Between SC and IMO   Integration Teams   Functional Integration Team   Communication Team   Integration Team Kick-Off   Chartering Integration Team ...

Post-Merger Integration Finance Planning

M&A Finance Day 100 Integration Plan

Over 110 finance initiatives/tasks to be completed in the first 100 days after close..

Organization Determine org chart for F&A Determine employee retention plan for F&A Accounting Variances Obtain inventory of Company B accounting policies Determine plan for migrating Company B to Company A policy & procedures Apply Company A's Management Reporting structure to Company B Map chart of accounts ...

Finance: 4 M&A Integration Charters from Different Acquisitions

Excerpt from First of Four Charters

PreClose / Planning

• Retention Plans: work with teams to define costs
• Day 1: Ensure plans developed to ensure readiness for Close
• Org. Structure:  Finance team migrates to Acquirer reporting Day One . . .

Finance & Accounting 90-Day Acquisition Integration Plan

Finance & Accounting 90-Day Acquisition Integration Plan that incudes 93 tasks grouped in the following categories: Budget and Forecast, Insurance Coverage, Limits of Authority, Insurance Policies, Reporting Process, Purchase Price Accounting, and External and Internal Audits.

Sub-Work Stream Budget and Finance

Post-Merger Integration Cross-Border Finance Plan

7-Page Finance Plan from a Cross-Border Merger.

Finalize and communicate organizational structure Coordinate closing process for August 2024 Establish initial treasury linkage to Acquirer

• Weekly cash forecast process established
• Weekly conference call re: cash position set up
• Presentation by NT on capabilities to replace lock box

Develop Tax Efficient Global Reorganization of Acquirer. . .

Finance/Tax/Treasury M&A Integration Team

PowerPoint presentation covering the schedule for implementation, non-negotiables, synergies, issues and assumptions, organization changes, and open issues for the cross-border integration in the Americas and EMEA.

Acquisition Integration Accounting Checklist

Acquisition Integration Accounting Checklist covers 88 integration tasks in areas such as treasury, synergy tracking, organization design, taxes, operational reporting, and financial close.

Payroll Merger & Acquisition Checklist

Acquiree’s Finance Sub-Team: Acquisition Integration Planning

Content Mission Key Decisions/ Operating Strategies Key Assumptions Summary of Integration Initiatives Open Issues/Decisions Remaining Pre-Close/Day One Items Integration Risks. . .

Acquisition Integration Finance Checklist

Newco - Finance Organization

• Schedule a work session with key stakeholders to assess functional redundancies and begin construct of attrition plan
• Build roles/responsibility matrix
• Construct a draft organization chart
• Conduct follow up meeting with key stakeholders to review draft and gather edits
• Schedule and conduct presentation meeting with decision making executives to present organization chart and gather further edits
• Revise new org chart. . .

Post-Merger Integration Finance Checklist

Over 110 finance integration tasks grouped in the areas of synergy tracking, chart of accounts, cash management, accounting policy variances, accounts payable, and accounts receivable.

Synergy Tracking

• Determine synergy tracking approach.  Decide on system and method.
• Identify team members and responsibilities.
• Create detailed implementation plans
• Create synergy tracking model templates
• ​Develop ongoing status reporting format and timing...

Post-Merger Integration HR Planning

M&A HR Playbooks from 3 Different Integrations

22-page HR M&A Playbook when printed that includes 3 plans from 3 different actual integrations.  Plans cover over 350 tasks/initiatives. 

Human Resources Acquisition Integration Plan

20-page detailed Human Resources Acquisition Integration Plan that covers:

• Organization Comparative Analysis: What are the key similarities and differences between the 2 organizations? How do we operate currently?
• Future State Recommendation: How will we operate in the future?
• Day 1 Items: What actions do we need to take at close?
• Risk Analysis: What are the risks associated with transition? Early Wins: Are there any immediate actions we can take to demonstrate benefits and success?
• Outstanding Issues & Decisions: What open issues still need to be resolved in order to realize transition?. . .

Pre-Close Review of Human Resources M&A Integration Plan

Meeting Objectives

Final review of the HR game plan prior to close between the players who have been involved in all the planning to date and the players who will be involved in the implementation.

Human Resources Post-Merger Integration Project Plan

The Human Resources Post-Merger Integration Project Plan covers tasks for organization planning, policies, benefits, communication, compensation, and HRIS systems.

Excerpt from Plan 

Post-Merger Integration Human Resources Plan

27 Initiatives/Activities

1.0  OD - Succession Planning

2.0  OD - Leadership Development

3.0  OD - Training

4.0  OD - Tuition Reimbursement

5.0  OD - Performance Management - Next Year

6.0  OD - Performance Management ...

Human Resources M&A Integration Planning Meeting

General Overview Implementation Schedule Synergy Summary Key Organizational Changes Key Issues & Assumptions Necessary Process Maps

Day 1 Human Resources M&A Integration Playbook

Covers 36 HR workstreams and more than 200 actions. Plus, includes key risks and interdependencies.

• Compensation
• Workers Comp.
• Health and Dental
• Short and Long Term Disability

M&A HR Due Diligence: Side-by-Side Comparison of the HR Programs

11-page comprehensive comparison of HR Programs of the Acquirer and Acquiree in 125 Areas.

The programs are grouped into the following categories:

• Defined Benefit Plans
• Retiree Medical Plan
• Defined Contribution Plan
• Health And Welfare Plans
• Career Development

Role of HR in Mergers and Acquisitions

Human Resources Role - 10 Key HR Activities in M&A

• Develop Workforce Integration Project Plan
• Conduct HR Due Diligence Review
• Compare Benefits and Analyze Differences
• Compare Compensation Analyze Differences
• Develop Compensation and Benefits Strategy for Workforce Integration
• Determine Leadership Assignments
• Addressed Duplicate Functions. . .

HR Acquisition Integration Checklist

In-depth Human Resources Acquisition Integration Checklist that covers compensation, retention, deferred compensation, severance, health insurance, COBRA, LTD, STD,  401(k), pension, communications, recruiting, data conversion, organization structure, workers compensation, training & development, educational assistance, travel & expense, plus 9 more areas.

Post-Merger Integration HR Checklist

111 Human Resources tasks to be completed grouped into the following categories:

Day 1 Talent Assessment Performance Management Benefits HR Orientation Career Development Onboarding Retention Reduction In Force New Hire Plan

HR Due Diligence Information Request Checklist

8-page hr due diligence checklist:.

• Organization charts and a description of management structure, including principal functional areas, headcount by area. and reporting relationships.  
• Job descriptions for all major job categories and minimum education, experience, and skill levels required for each.  
• Current pay ranges and recent increases.   
• List current personnel (including lists of officers and directors) with hire dates ... 

Acquisition Checklist for HR

HR Acquisition Integration Checklist in Word  that covers areas such as organizational design, benefits and compensation, policies, and HR systems.

Organization

• Define acquired company org. structure
• Identify formal and informal org. relationships
• Determine organization similarities / differences
• Gather information on relevant positions
• Map acquired company roles to acquiring company role ...

Evaluation of HR Acquisition Integration Plan

The biggest challenges with this planning team have been:

• Lack of clarity regarding what they own and what they don’t own within their charter (i.e., staffing, severance, retention, titling, compensation, org. design, etc.)
• Slow to develop things that they feel they need more time to work on (staffing, severance, retention, etc.)
• Figuring out if they could engage outside consultants 

Human Resources M&A Survey on Resources Needed

Three-page HR survey tool covering 10 key questions.

1. Please describe the anticipated level of change from the merger in your region:

a. No change  b. Minimal change  c. Moderate change  d. Significant change  e. Unable to anticipate level of change at this time

Post-Merger Integration IT Planning

Information Technology Post-Merger Integration Playbook

Information technology high-level plan (section 1).

Executive Summary Approach Current State Proposed State Gap Analysis To-Be State Implementation Plan Implementation Schedule Implementation Budget ...

Information Technology M&A Integration Plan

Key Objectives of The Workstream Workstream Organization and Scope System End State After Integration Planning Goals Key Facts IT Integration Migration Strategy for Local Acquired Co Applications Local Acquired Co Applications in Scope for Migration High Level Schedule . . .

IT Integration Strategy for Mergers and Acquisitions

• IT Strategy for M&A Integration
• Summary of Synergies
• Key Choices
• Key Projects
• Key Difficulties and Risk

Information Technology Acquisition Integration Objectives

Areas of focus.

• Review for contract synergies
• Plan for back-office standardization
• Communication
• Email connectivity
• Network connectivity
• Voice mail connectivity
• Video conferencing . . .

Information Technology Plans from 4 M&A Integration Playbooks

The four information technology integration plans are from $90 million, $2 billion, and $25 billion deals plus one small cross-border transaction.

The full Excel version is available to MergerIntegration.com subscribers and Merger Integration Certification Workshop attendees .

IT Mergers & Acquisitions Checklist

IT Mergers & Acquisitions Checklist that covers Networks, Applications, IT Operations, IT Policies and Procedures, IT Projects, and Coordination.

Operations and Technology M&A Integration Work Streams

Step I: Assess Current Situation Step II: Develop Plan Step III: Target IT Design Outline

The operations and technology integration work streams will be responsible for analyzing . . .

IT Post Merger Integration Overview

M&A Integration Program Design Defining the big picture What will we do? Why are we doing it? When are we doing it? Project Design Project Charter, Work Breakdown, Work Plan, Resource Plan, Cost Project Execution …  

IT Post Merger Integration Process

Tasks Before Kick-Off Meeting

• Identify business project leader, person from the business with extensive knowledge of the current operations who will have significant time (50%) to dedicate to the project  
• Conduct an initial IT discovery session – including a site tour and general process discussions 
• Prepare plan / schedule for process walk-through/requirements sessions …

M&A Integration IT Checklist

M&A Integration IT Checklist in Word that covers Applications, Operations, IT Organization, Security and Access. Network Infrastructure, Enterprise Technology, Finance, and HR.

Applications

• Transition business control of Target Co.com
• Migrate Target Co. SharePoint instance
• Transition Imaging - CIS/Viewpoint (Carla) to Acquirer governance
• Audit and review issues
• Transfer to Acquirer support and governance ...

Post-Merger Integration Sales and Marketing Planning

Marketing and Branding Post-Merger Integration Plan

Plan contents.

• Assumptions
• Branding Strategy
• Team Charters (Branding, Marketing, Communications)
• Branding Migration
• Branding Integration Plan
• Dependencies . . .

Post-Merger Sales Integration: The #1 Hotspot

There’s an old line that says, “If mama ain’t happy, nobody’s happy.” Adapting that notion to the world of M&A, I’d say, “If Sales ain’t happy, nobody’s happy …"

Sales and Marketing M&A Integration Playbook - $25 Million Acquisition

Recommends 200 activities including:

• Accessing target's selling process
• Identifying overlap in product and service offerings
• Integration proposal process
• Developing transition plan
• Determining changes to brands
• Identifying new customer target opportunities
• Developing plan to capture synergies
• Harmonizing performance measures
• Establishing customer retention program

M&A Integration Business Development Checklist

• Schedule a meeting with top executives from key functions (Operations, Business Development, Finance) at target to present the corporate growth strategy
• Identify key stakeholders within target to work on corporate strategy team
• Construct, build, and publish Newco Business Development Org. chart
• Design a core competency/skill matrix with target and overlap with Acquirer’s matrix for clear understanding of key offerings 
• Schedule meetings with key stakeholders ...

Case Study Exercise - Creating a Sales Integration Team Charter

Team Scope/Objective

• Integrate sales and marketing processes within 3 months.  Automate the sales reporting process and train the sales staff.  Achieve cross-selling synergies.

Culture and Change Management Post-Merger Integration Planning

Culture Integration in Mergers & Acquisitions

• Merging Requires New Culture and Behaviors
• Closing the Gap
• Work Culture Implementation Schedule
• Work Culture Team Mission Statement
• Mission of Organizational Development
• Characteristics of An OD Function
• What Are We Doing
• Quote on Culture . . .

Organizational Culture and Mergers: The Hard Facts

Hard Facts About Culture

• Strategy is a product of your view of the future.
• Culture is essentially the product of your history
• That will always present a challenge in ensuring that the corporate culture is aligned with and supports your plans for tomorrow.
• VERY FEW culture characteristics wield a make-or-break influence …

Post-Merger Integration Culture

Several Ways to Address Cultural Issues Four Possible Scenarios for Culture Integration Advantages to Each Approach Why Are Post-Merger Cultural Issues Difficult to Manage Consequences of Culture Conflict Culture Differences Can Cause Integration Failure 3 Important Drivers of Cultural Issues. . .

Change Management Plan for M&A Integration

Change Management Plan Overview Change Management Team Adds Value in Eight Areas Change Management Plan Change Management Team Mission Deliverables Interdependencies / Coordination Required Hot Topics / Urgent Issues to Be Solved. . .

Change Management Post Merger Integration Plan

• Develop a comprehensive change management plan that identifies what is changing and what is not as a result of the merger 
• Design and deploy mechanisms to help employees understand the required changes and take personal responsibility for successfully implementing them
• Prioritize activities …

Other Post-Merger Integration Team Planning

Procurement M&A Integration Team Planning

• Global Process Improvement Plan Development Timeline
• Our Process
• How We Get There …
• Supply Chain “Core Competence “ Strategy 
• Associated Costs
• Implementation Schedule - Wave 1 . . .

Manufacturing Post-Merger Integration Plan Overview

Objectives Summary of Synergies Plan Implementation Targets Headcount Reductions Plans Risks

Engineering High-Level Post-Merger Integration Plan

Mission Opportunities Main Costs Key Decisions Key Value Drivers Main Synergies Difficulties and Risks

Legal and Risk Management M&A Integration Planning Meeting

Overview Implementation Schedule Synergy Summary Key Organizational Changes Key Issues & Assumptions Necessary Process Maps

Integration Planning Guide for M&A Teams

• IMO Members/Executives: Help ensure the discussion is focused on the critical/material issues that will enable or hinder achievement of our integration objectives 
• Presenting Team Leads: Crisply articulate a summary of the team’s recommendations, financial impact, and risks …

Educating Teams on M&A Integration Planning

The 5 Critical Elements of an M&A Integration Plan

Speed and high performance in M&A are byproducts of clarity. Integration teams build momentum and cover ground at a much faster clip when five areas are clearly defined in their plans . . .  

Detailed M&A Integration Planning Requirements

Required to Complete - Functions

• Functional M&A Integration Action Plan
• Project Definition Documents for each item that qualifies as a “Project”
• Project Plan (Gantt chart) for each item that qualifies as a “Project”
• Business Requirements …

Attributes of a High-Quality Merger & Acquisition Integration Plan

Attributes of a High-Quality, Detailed Plan

• Single owner: One point of accountability makes it clear who is coordinating the effort and calling the shots
• Parallel level of task detail: Major steps are specific enough to allow the owner to understand what is expected, but not so detailed as to include every task necessary to accomplish the work …

Smartsheet Tutorial for M&A Integration Team Members

• Understand how to use SmartSheet for your M&A integration work plan development
• Discuss tips and best practices that will help us produce quality plans
• Confirm key steps and focus for the next phase of plan development
• Take care of some housekeeping items

How Should You Prioritize Work Streams?

"It really depends on the rationale for each specific deal, but in general, mark a work stream as high priority if it has a significant number attached to it – projects or initiatives that will achieve savings and benefits from the integration. Also, any areas where maintaining two versions of a similar process, policy, or specific way of doing business will cause disruption and slow the mIgration to NewCo ..."

Cross-Border M&A Integration Planning

Employee Briefing on Acquisition

Why Acquired Co. Market Strength / The People Combined Strength Acquired Co. Overview  Strategy for The Future North America Opportunities for Employees Merger Timeline More Information. . .

Post-Merger Integration Planning Meeting

Imo meeting objectives.

Align on business principles and integration priorities:

• Review integration strategy and key objectives
• Review governance structure, roles and responsibilities
• Review and reinforce integration philosophy

Agree to way of working together:

• Review rules of engagement to ensure pre-close compliance with anti-trust guidelines. . .

Cross-Border Day 1 Merger Integration Plan

Excerpt from day 1 cross-border plan for 5 cities and 4 countries.

Internal Comm: FAQs (IT, Payroll info: semi-monthly to bi-weekly, Cobra, Remote I-9s (notarized), holiday, FICA withholding, insurance deductible) Full List of Employees (preferred name, email address, cost center, job title) Establish new vendor as supplier (interim IT support)

Internal Comm: ...

Key Data for M&A Integration Planning

• Integration Team Matrix
• Due Diligence/Integration Team Responsibilities
• Integration Team Goals
• Critical Dates
• Integration Teams
• Due Dates: Team Detailed Project Plan
• Integration “Day 1” and “Day 90” Plans
• Integration Team Plan Overview . . .

Human Resources Cross-Border M&A Integration Pre-Close Planning

• Business Continuity Critical
• Key Integration Challenges as Close Approaches
• Efforts Made to Stabilize Acquired Co.
• HR Issues to Address
• Integration in 3 Phases
• Breakout Purpose and Objectives

Cross-Border M&A Integration Playbook

Cross Border Plan - Excel file 21 pages when printed

Integration Dashboard Finance Human Resources Information Technology Marketing and Communications UK and EMEA North America and APAC Operations

M&A Integration Day 1 Plan

• Key Milestones
• April 19 Is the Day We Are One
• Event Schedule April 20 And 21
• Agenda for Global Town Hall
• Guidance for Field Force and Shift Workers
• Day One Employee Kits for Local Implementation
• Day One Employee Welcome Package for All Employees . . .

Cross-Border M&A Integration Plans

High-Level M&A Integration Plans

• Go to Market
• Communications . . .

M&A Change Management Plan

• Change Management Priorities - Integration
• Integration Change Management Timeline
• Vision, Operating Framework and Leadership Alignment . . .

Cross-Border M&A Synergies

Synergies for the following work streams:

• Finance & Corporate Admin Phase One Americas
• Finance & Corporate Admin Phase 2  EMEA
• Legal & Risk Management
• Administration
• Manufacturing Operations
• Customer Support
• Columns on the Excel Spreadsheet:

Functional Team Post-Merger Integration Plan Reviews

Functions Reviewed

Legal/ Acquisition Tax  Tax UK HR, Payroll Information Services Real Estate Finance . . .

Post-Merger Integration Planning Tools

Post-Merger Integration Checklists: IT, HR, Finance, and Legal

Four Post-Merger Integration Checklists that cover Information Technology, Human Resources, Finance, and Legal.

eMerger: Post-Merger Integration Software

Post-Merger Integration Planning Software (Includes 20 steps, 107 tasks, and 45 tools)

Objective : Creating a blueprint for the integration

• Creating an Integration infrastructure
• Developing key strategies for the new business
• Determining overall Integration initiatives

Post-Merger Integration C ommunication Planning Software (Includes 15 steps, 55 tasks, and 39 tools)

Objective : Developing a consistent process for communicating

• Chartering the Communications Announcement Team
• Developing the Core Messages
• Detailing the strategy and plan for ongoing communications . . .

M&A Integration Plan Checklists

Checklists The "Hard" and "Soft" Elements M&A

Templates for Post-Merger Integration Plan Review

Questions to review communications, costs, and systems in each plan.

Risk Assessment:

What is the risk of not being able to support the plan from a communications standpoint?

Rate the risk on a scale of 1 to 10 with 1= low risk and 10 = high risk: ...

M&A HR Integration Checklist

The Human Resources Acquisition Integration Checklist covers the following areas: Pension Plan, 401K, Profit Sharing, HRIS, Health Benefits, Compensation, Severance and Transition, Workers Compensation, Employee Relations, Organizational Development and Staffing,  and Safety / Environmental.

Flowcharts for Each M&A Workstream

IMO Tools : Synergy capture template, Quick wins template, M&A scorecard tool, Scope change request, Progress reporting template … 

IMO Deliverables : Prioritized list of value drivers, Integration strategy, Overall integration scorecard, SharePoint Site, Governance guidelines …  

Target Operating Model and Roadmap Template

Buyer As-Is Assessment People, Processes, Systems & Tools, Assets & Infrastructure, Contracts

Seller As-Is Assessment People, Processes, Systems & Tools, Assets & Infrastructure, Contracts

End-State Target Operating Model Gaps and Transformation Steps

How to Identify Post-Merger Integration Priorities

In this task, each Integration Team identifies their priority initiatives and action items. Depending on the size, complexity, and resources dedicated to Integration, this activity can take two weeks to a month. The team may work from a generic list of tasks or start at ground zero with analysis of the merging organizations. The objective is to list the short- and long-term initiatives that will help the combined companies achieve the defined merger synergies and goals.

M&A Playbook Template

Content of Day 1 Communications Playbook

• Company Profile/Fact Sheet
• Day 1 hour-by-hour review of actions; include location, who performs, who coordinates/owns
• Core Messages for Customers, Employees, Vendors, Partners …

High-Level Integration Plan Templates

• Integration Goals
• High-Level Initiatives
• Approach to Merger Integration Planning ...

Functional Integration Team Plan Templates

• Task Force Members/Structure
• Key Decisions/Strategies
• Open/Remaining Decisions
• M&A Integration Initiatives …

Acquisition Project Plan Excel Template

The Excel file includes integration project plan templates for Finance, HR, IT,  Corporate, Legal, and Operations. 

Column headings in the spreadsheet templates are: Work Streams, Initiatives, Owner, Day 1 Mandatories, Start Date, Completion Date, Key Issues and Risks, Cross Dependencies, and Actions Required.

The templates were utilized in the M&A Integration Playbook - 20 Billion Acquisition.

CEO Letter to Employees about Acquisition

Example of a CEO Letter to Employees in a Downloadable, Easy-to-Customize Word File

TO:  All Employees

SUBJECT:  Acquisition by ABA

Today we announced that OCN Inc. has agreed to be acquired by ABA. Upon closure of the deal, OCN will become part of the ABAs worldwide organization. Our combined operations will have revenue of nearly $500 million and employ approximately ... 

Mergers & Acquisitions – They say selling a business is an art – we’ve turned it into a science

Get started today. At Morgan & Westfield, there are never any long-term contracts.

Morgan & Westfield is a leading M&A firm. Here are some of the people who make it happen.

Our goal is to help you successfully exit your business. Here are answers to some of our most commonly asked questions.

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Morgan & Westfield sold in 100+ industries. Whatever your business, we’ve got you covered.

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From processing and manufacturing to production and distribution, we’ll give you the advice you need to maximize the value of your company when it comes time to sell.

Business services firms differ in the services they offer, so we customize our solutions to meet and exceed clients’ service goals.

Morgan & Westfield serves as a trusted partner to plumbing and HVAC businesses, mechanical and commercial contractors, and other home service enterprises looking to sell.

Comprehensive articles on every step of the process of buying or selling a business in the M&A industry.

The Art of the Exit, A Beginner’s Guide to Business Valuation, The Exit Strategy Handbook, Closing the Deal, Acquired, and Food and Beverage M&A

M&A Talk is the #1 podcast on mergers & acquisitions. We talk to the most experienced professionals in the industry to uncover their secrets.

Food & Beverage Talk is the #1 podcast exclusively focused on the food and beverage industry. We offer interviews with the top experts in the food & beverage industry.

Priceless advice for entrepreneurs of middle-market businesses with revenues up to $100 million.

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Knowledgebase Topics

Business exit plan & strategy checklist | a complete guide.

Executive Summary It’s not enough to merely hand over the keys at the closing. You need a strategy. An exit strategy. An exit strategy, as the term implies, is a plan to assist you in exiting your business. All exit plans will vary, but they all contain common elements. The three common elements that all business exit strategies should contain are: A valuation of your company.  The process of valuing your company involves three steps, the first being an assessment of the current value of your business. Once this value is calculated, you should plan how to both preserve and increase that value. Your exit options.  After you have determined a range of values for your company and developed plans for preserving and increasing this value, you can begin exploring your potential exit options. These can be broken down into inside, outside, and involuntary exit options. Your team.  Finally, you should form a team to help you prepare and execute your exit plan. Your team can consist of an M&A advisor, attorney, accountant, financial planner, and business coach. If you are considering selling your business in the near future, planning for the sale is imperative if you want to maximize the price and ensure a successful transaction. This article will give you a solid understanding of these elements and how you can put them together to orchestrate a smooth exit from your business.

Business Exit Plan Strategy Component #1: Valuation

Your exit strategy should begin with a  valuation, or appraisal,  of your company. The process of valuing your company involves three steps, the first being an assessment of the current value of your business. Once this value is calculated, you should then plan how to both preserve and increase the value of your business.

Let’s explore each of these components — assess, preserve, increase — in more depth.

Assess the Value

The first step in any exit plan is to assess the current value of your business.

Here are questions to address before beginning a valuation of your company:

• Who  will value your company?
• What methods  will that person use to value your company?
• What form  will the valuation take?

Who:  Ideally,  whoever values your company should have real-world experience buying and selling companies , whether through business brokerage, M&A, or investment banking experience. They should also have experience selling companies comparable to yours in size and complexity. Specific industry experience related to your business is helpful, but not essential, in our opinion. There are loads of professionals out there who possess the academic qualifications to appraise your business but who have never sold a company in their lives. These individuals can include  accountants or CPAs,  your financial advisor, or business appraisers. It is essential that your appraiser have real-world M&A experience. Without hands-on experience buying and selling companies comparable to yours, an appraiser will be unprepared to address the myriad nuances of the report or field the dozens of questions that will arise after preparing the valuation.

Action Step:  Ask whoever is valuing your business how many companies they have sold and what percentage of their professional practice is devoted to buying and selling businesses versus other activities.

What Methods:  Most business appraisers perform business valuations for legal purposes such as divorce, bankruptcy, tax planning, and so forth. These types of appraisals differ from an appraisal prepared for the purpose of selling your business.  The methods used are different , and the values will altogether be different as well. By hiring someone who has real-world experience selling businesses, as opposed to theoretical knowledge regarding buying and selling businesses, you will work with someone who will know how to perform an appraisal that will stand the test of buyers in the real world.

Form:  Your M&A business valuation can take one of two forms:

• Verbal Opinion of Value:  This typically involves the professional spending several hours reviewing your financial statements and business, then verbally communicating an opinion of their assessment to you.
• Written Report:  A written report can take the form of either a “calculation of value” or a “full report.” A calculation of value cannot be used for legal purposes such as divorce, tax planning, or bankruptcy, but for the purpose of selling a business, either type is acceptable.

Is a verbal or written report preferable? It depends. A verbal opinion of value can be quite useful if you are the sole owner and you do not need to have anyone else review the valuation.

The limitations of a verbal opinion of value are:

• If there are multiple owners, there may be confusion or disagreement regarding an essential element of the valuation. If a disagreement does arise, supporting documentation for each side will be necessary to resolve the disagreement.
• You will not have a detailed written report to share with other professionals on your team, such as  attorneys , your accountant, financial advisor, and insurance advisor.
• The lack of such a detailed report makes it difficult to seek a second opinion, as the new appraiser will have to start from scratch, adding time and money to your process.

For the reasons above, we often recommend a written report, particularly if you are not planning to sell your business immediately.

We have been involved in situations in which CPA firms have  valued a business  but had little documentation (one to two pages in many cases) to substantiate the basis of the valuation.

In one example, the CPA firm’s measure of cash flow was not even defined; it was simply listed as “‘cash flow.” This is a misnomer as there are few agreements regarding the technical definition of this term. As a result, any assumption we might have made would have led to a 20% to 25% error at minimum in the valuation of the company. By having a written report in which the appraiser’s assumptions are documented, it is simple to have these assumptions reviewed or discussed.

Note:  When hiring someone to value your company, you are paying for a professional’s opinion but keep in mind that this opinion may differ from a prospective buyer’s opinion.  Some companies have a narrow range of value (perhaps 10% to 20%), while other companies’ valuations can vary wildly based on who the buyer is, often by up to 100% to 200%.  By having a valuation performed, you will be able to understand the wide range of values that your company may attain. As an example, business appraisers’ valuations often contain a final, exact figure, such as $2,638,290. Such precision is misleading in a valuation for the purpose of a sale. We prefer valuations that result in a more realistic price range, such as $2,200,000 to $2,800,000. An experienced M&A professional can explain where you will likely fall within that range and why.

Preserve the Value

Once you have established the range of values for your company, you should develop a plan to “preserve” this value. Note that preserving value is different from increasing value. Preserving value primarily involves preventing a loss in value.

Your plan should contain clear strategies to prevent catastrophic losses in the following categories:

• Litigation:  Litigation can destroy the value of your company. You and your team should prepare a plan to mitigate the damaging effects of litigation. Have your attorney perform a legal audit of your company to identify any concerns or discrepancies that need to be addressed.
• Losses you can mitigate through insurance:  Meet with your CPA, attorney, financial advisor, and insurance advisor to discuss potential losses that can be minimized through intelligent insurance planning. Examples include your permanent disability, a fire at your business, a flood, or other natural disasters, and the like.
• Taxes:  You should also meet with your CPA, attorney, financial advisor, and tax planner to  mitigate potential tax liabilities.

Important:  The particulars of your plan to preserve the value of your company also depend on your exit options, which we will discuss below. Many elements of your exit plan are interdependent. This interdependency increases the complexity of the planning process and underscores the importance of a team when planning your exit.

Only after you have taken steps to  preserve  the value of your company should you begin actively taking steps to  increase  the value of your company.

Increase the Value

There is no simple method or formula  for increasing the value of any business.  This step must be customized for your company.

This plan begins with an in-depth analysis of your company, its risk factors, and its growth opportunities. It is also crucial to determine  who the likely buyer of your business will be . Your broker or M&A advisor will be able to advise you regarding what buyers in the marketplace are looking for.

Here are some steps you can take to increase the value of your business:

• Avoid excessive customer concentration
• Avoid excessive employee dependency
• Avoid excessive supplier dependency
• Increase  recurring revenue
• Increase the size of your repeat-customer base
• Document and streamline operations
• Build and incentivize your management team
• Physically tidy up the business
• Replace worn or old equipment
• Pay off equipment leases
• Reduce employee turnover
• Differentiate your products or services
• Document your intellectual property
• Create additional product or service lines
• Develop repeatable processes that allow your business to scale more quickly
• Increase  EBITDA or SDE
• Build barriers to entry

Note:  A professional advisor can help you ascertain and prioritize the best actions for your unique situation to increase the value of your business. Unfortunately, we have seen owners of businesses spend three months to a year on initiatives to increase the value of their business, only to discover that the initiatives they worked on were unlikely to yield any value to a buyer.

Business Exit Strategy Component #2: Exit Options

After you have determined a range of values for your company and developed plans for preserving and increasing this value, you can begin exploring your potential exit options.

Note:  These steps are interdependent. You can’t determine your exit options until you have a baseline valuation for your company, but you can’t prepare a valuation for your business until you have explored your exit options. A professional can help you determine the best order to explore these steps, or if the two components should be explored simultaneously. This is why real-world experience is critical.

All exit options can be broadly categorized into three groups:

• Inside:  Buyer comes from within your company or family
• Outside:  Buyer comes from outside of your company or family
• Involuntary:  Includes involuntary situations such as death, divorce, or disability

Inside Exit Options

Inside options include:

• Selling to your children or other family members
• Selling to your business to your employees
• Selling to a co-owner

Inside exits require a professional who has experience dealing with family businesses, as they often involve emotional elements that must be navigated and addressed discreetly, gracefully, and without bias. Inside exit options also greatly benefit from tax planning because if the money used to buy the company is generated from the business, it may be taxed twice. Lastly, inside exits also tend to realize a much lower valuation than outside exits. Due to these complexities, most business owners avoid inside exits and choose outside options. Fortunately, most M&A advisors specialize in outside exit options.

Outside Exit Options

Outside exit options include:

• Selling to a private individual
• Selling to another company or  competitor
• Selling to a financial buyer, such as a private equity group

Outside exits tend to realize the most value. This is also the area where business brokers, M&A advisors, and investment bankers specialize.

Involuntary Exit Options

Involuntary exits can result from death, disability, or divorce. Your plan should anticipate such occurrences, however unlikely they may seem, and include steps to avoid or mitigate potential adverse effects.

Business Exit Strategy Component #3: Team

Team members.

Finally, you should form a team to help you plan and execute your exit plan. Many of these steps are interdependent — they are not always performed sequentially, and some steps may be performed at the same time. Forming a team will help you navigate the options and the sequence.

Your team should involve the following:

• M&A Advisor/Investment Banker/Business Broker:  If you are considering an outside exit.
• Estate planning
• Financial planning
• Tax planning, employee incentives, and benefits
• Family business
• Accountant/CPA:  Your accountant should have experience in many of the same areas as your attorney, along with audit experience and retirement planning. Again, it is unlikely that your CPA possesses all of the skills you need. If further expertise is needed, the CPA should be able to access the skills you need, either through colleagues at their firm or by referral to another accountant.
• Financial Planner/Insurance Advisor:  This team member is critical. We were once in the late stages of a sale when the owner suddenly realized that, after deducting taxes, his estimated proceeds from the sale would not be enough to retire on. An experienced financial planner can help with matters like these. They should have estate and business continuity planning experience, as well as experience with benefits and retirement plans.
• Business Coach:  A business consultant or coach may be necessary to help implement many of the changes needed to increase the value of your business, such as building infrastructure and establishing a strong, cohesive management team. Doing this often requires someone who can point out your blind spots. A coach can help you take these important steps.

Where to find professionals for your team

The best way to find professionals for your team is through referrals from trusted friends and colleagues who have personally worked with the professional in question. Don’t ignore your intuition, however. It’s important that you and your team members have good chemistry.

The Annual Audit

We recommend that you assemble your professional advisors for an annual meeting to perform an audit of your business. The goal of this audit is to prevent and discover problems early on and resolve them. As the saying goes, “An ounce of prevention is worth a pound of cure.”

Your advisors are a valuable source of information. This annual meeting is an opportunity to ensure that they’re all on the same page and that there are no conflicts among your legal, financial, operational, and other plans. An in-person or virtual group meeting enables you to accomplish this quickly and efficiently.

A sample agenda might include a review of the following:

• Your operating documents
• New forms of liability your business has assumed
• Any increase in value in your business and changes that need to be made, such as increases in insurance or tax planning
• Capital needs
• Insurance requirements and audit, and review of existing coverages to ensure these are adequate
• Tax planning — both personal and corporate
• Estate planning — includes an assessment of your net worth and business value, and any needed adjustments
• Personal financial planning

If you are contemplating selling your business, creating an exit plan will answer these critical questions:

• How much is my business worth? To whom?
• How much can I get for my business? In what market?
• How much do I need to make from the sale of my business to meet my goals?

Taking the strategic steps discussed in this article — assembling a stellar professional team and optimizing the team’s collective experience — will get you well on your way toward successfully selling your business and turning confidently toward your next adventure.

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Emergent, pivoting away from CDMO business, sells Baltimore plant to acquisitive Bora for $30M

The asset sale portion of Emergent BioSolutions’ sweeping restructuring plan is taking shape.

In a $30 million deal, Emergent has agreed to sell its fill-finish drug product facility in Baltimore to growing Taiwanese CDMO Bora Pharmaceuticals, the two companies said Thursday.

The 87,000-square-feet Camden facility offers clinical and commercial non-viral aseptic fill-finish services on four fill lines, including lyophilization, formulation development and support services.

About 350 Emergent employees are expected to join Bora as part of the transaction, which is expected to close in the third quarter of 2024, according to Emergent. Bora, through a media aide, confirmed to Fierce Pharma via email that the company plans to keep all existing employees at the plant.

“The decision to sell our Camden manufacturing facility is aligned with our multi-year plan to create a customer focused, leaner and more flexible organization, while we improve overall profitability and raise capital to reduce our debt,” newly minted Emergent CEO Joe Papa said in a statement Thursday.

The Camden site doesn’t have the most pristine track record. Following an FDA Form 483, the plant was slapped with an FDA warning letter in 2022 that detailed problems related to equipment cleaning, aseptic sterilization techniques and procedures, and quality systems. The problems were deemed adequately addressed and the warning letter closed following another FDA inspection last summer.

The sale represents one piece in Emergent’s plan to deprioritize  its CDMO business. About two months into his CEO role, Papa in May unveiled a restructuring initiative to reduce the company’s workforce by about 300 employees and to shut down two manufacturing facilities, while exploring strategic alternatives for some other plants.

The two facilities being closed are located in Baltimore-Bayview and Rockville, Maryland. The Camden facility belongs to the group of sites for which Emergent has been weighing its options.

Besides sites in Winnipeg, Canada, and Lansing, Michigan, which Emergent said it will keep, the company also owns about 122,500 square feet of manufacturing and warehouse space in Canton, Massachusetts, where Emergent has scaled back operations.

In contrast to Emergent’s shrinking interest in the CDMO field, Bora has been on an expansion spree. The Taiwanese company just established a U.S. footprint earlier this year with a $210 million acquisition of Minnesota generics manufacturer Upsher-Smith Laboratories.

The Upsher-Smith buy followed two acquisitions by Bora in 2022. Through the purchase of fellow Taiwanese company TWi Pharmaceuticals, Bora gained two manufacturing facilities and some niche technologies. The same year, Bora beefed up its biologics capabilities by acquiring Eden Biologic’s CDMO business.

Buying the Camden sterile injectable fill-finish plant “not only demonstrates our commitment to our growth strategy and plans for expansion in North America, but also enables us to expand our offering for our biologics customers,” Bora CEO Bobby Sheng said in a statement Thursday.

Without offering further details, Bora said it has “ambitious plans to enhance the newly acquired facility.” And the company is “always considering sites that are available,” Bora told Fierce Pharma.

“We are planning to expand our operations across the US market to significantly enhance Bora’s position as a global competitor,” the company said. “As part of our growth strategy, we are constantly listening to our customer's needs to spot opportunities to provide the best possible service.”

Italy’s ‘Critical’ Raw Materials Procurement Boost

Italy looks set to adopt a series of measures aimed at boosting the procurement and reuse of “critical” raw materials, according to recent reports. 

The Italian government, led by Prime Minister Giorgia Meloni, has made domestic material extraction a priority to ensure businesses are not reliant on high-risk, unreliable imports .

Procurement projects deemed "urgent" by Minister

Its estimated that Italy can procure 16 out of 34 of the EU’s “critical” raw materials itself, without relying on imports. 

The list includes lithium, commonly used in EV batteries , and baryte, used in drilling fluid, and could lead to tangible advantages for Italian industries. 

The reports follow the Critical Raw Materials Act (CRMA) in 2023, when the European Parliament aimed to increase and diversify the supply of these materials and strengthen the circularity of raw materials in-line with the Net-Zero Industry Act (NZIA).

Now, Business and Made in Italy Minister Adolfo Urso promotes a new draft to boost the procurement of these raw materials. In it, he states that these procurement projects to extract, process or cycle critical raw materials are “non-deferrable and urgent.”

Despite working within the framework of the CRMA, which ensures the industry can compete with powerhouses such as the United States or China, the Italian decree may not hold up under the NZIA. 

It is set to allow exploration permits for the procurement of raw materials, without an environmental impact assessment beforehand.

Supply chains can also expect a boost

The draft will also trigger the reopening of some closed or abandoned mining sites, largely situated in the Alps, Tuscany and Sardinia.

Companies looking to take advantage of this shift can expect to pay the state between five to seven percent of their output value.

Alongside this news the long-awaited government-backed “Made in Italy” fund, which aims to support the country’s key supply chains, will be established with US$1.07bn of state investment. 

There are also plans to raise an additional billion from other non-public sources- totaling an approximate US$2bn supply chain boost.

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The role of life insurance

How much life insurance do i need.

• Assessing your financial situation 

Methods for life insurance coverage calculation

Reviewing and updating life insurance coverage, calculating life insurance faqs, how much life insurance do you need.

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.

• Many Americans don't have life insurance, and half of those that do don't have enough.
• Online life insurance calculators can help calculate how much life insurance you need.
• For comprehensive coverage, speak with a financial advisor, accountant, and estate planning attorney.
• Compare life insurance quotes with Policygenius .

Many Americans don't have life insurance, and half of those who do, don't have enough. According to a study from Global Atlantic Financial Group , 43% of Americans don't have life insurance. According to Insure , half of Americans who do have life insurance are underinsured, meaning their death benefit would not cover expenses like mortgage, college, food, debts, and clothing for dependents in the event of their death.

If you have employer-provided group life insurance through your job, note that those policies will end if you retire, are laid off, or are terminated. That is why it is best to have a personal life insurance policy as well.

The best option for determining how much life insurance you need is to speak with a financial professional. However, if you aren't ready to make a call yet, online life insurance calculators can help give you estimates as a starting point. 

The goal of life insurance is to ease the burden on your loved ones after your loss—to cover the mortgage, education, and other expenses. It's important to carry an adequate amount of protection so your dependents are fully covered if you pass away. 

You'll probably want to get as much life insurance as you can comfortably afford each month. If it would be a struggle to make your premium payments, it's probably too much for you.

Business Insider created three sample scenarios to estimate life insurance needs for people living in Brooklyn, Dallas, and Denver using SmartAsset's life insurance calculator . 

Each calculation was based on the following assumptions: a 35-year-old with two kids and a working spouse, with an annual salary of $60,000, owns a median-priced home in their city, plans to pay for children's college tuition at an out-of-state public institution, and has savings and investments.

The charts below show the estimated life insurance policy needed for five different income levels with the above assumptions:

Assessing your financial situation 

Income replacement needs.

Life insurance replaces your income so the people who rely on you can maintain their standard of living. It covers day-to-day expenses like rent payments, groceries, transportation, and other essential costs. 

Although life insurance is widely used to replace income, life insurance for non-income earners may also be as essential. For example, life insurance can cover childcare and household services that a stay-at-home parent would've ordinarily taken care of before they passed away. 

Debt and final expenses 

An unexpected (or expected in the case of terminal illness) death makes handling debt difficult for those who share financial liabilities with you. Life insurance provides a death benefit to cover outstanding obligations if you were to die.  

Life insurance can also cover end-of-life expenses like your funeral service and burial or cremation costs so your loved ones can focus on grieving your passing. 

Future financial obligations

In your life insurance calculations, you'll also want to factor in future financial obligations. For example, if you have children, you may want to ensure they have funds for post-secondary education. 

10 to 15 times your annual income 

When selecting your death benefit amount, the rule of thumb is to select 10 times your annual income. For example, if you make $75,000 per year, you would purchase a life insurance policy for $750,000 to $1,125,000. It is not uncommon for people to get $1 million in life insurance.

If you have children, you may also want to factor in about $100,000 to $150,000 of post-secondary education coverage for each child. 

Multiplying your income gives you a rough estimate of how much life insurance you should purchase. You can use it as a starting point, but there are more accurate ways to determine the amount you need. 

The DIME formula 

The DIME is a more comprehensive method of calculating your coverage needs. DIME entails adding up the following components of your finances: 

• Debt: Calculate the total of all your debt (e.g. loans, credit cards, medical bills, etc.), excluding your mortgage. You may also want to include costs for end-of-life expenses.
• Income: Multiply your income by how many years your beneficiaries will likely need it. The Guardian suggests a good place to start is multiplying your income by the number of years until your youngest child graduates high school. However, this amount may be larger if you have lifelong dependents. 
• Mortgage: Check your statements to find the outstanding balance of your mortgage. If you have a second mortgage or HELOC (Home Equity Line of Credit) on your home, be sure to include that in your calculations. 
• Education : If you have children, anticipate spending upwards of $100k to $150k for post-secondary education for each child. 

After adding those up, subtract any current savings or life insurance policies you already carry. 

Using an online calculator 

You can use online calculators to get an estimate of how much life insurance you will need. Nonprofit organization Life Happens, for instance, offers an online life insurance calculator that asks a few questions so you can get an estimate of the amount of life insurance coverage you may need. 

An online calculator doesn't replace the comprehensive advice you would receive from a financial advisor who would look at your financial situation, goals, and estate planning, says Maria Roloff, a wealth advisor at Northwestern Mutual Insurance . However, it will give you an idea of what to expect when you speak with life insurance specialists.

Consulting a financial professional 

When considering life insurance, it is wise to consult a financial advisor, accountant, and estate planning attorney to make sure you have the best life insurance coverage for your goals and budget. Your life insurance needs will change as you age and must consider children, marriage, divorce, retirement, and caring for aging parents. 

A comprehensive assessment will include whether you need long-term care life insurance, disability insurance, or a combination of permanent and term life insurance . Find someone you trust with knowledge of the different types of life insurance products and a background in estate planning. Business Insider recommends following these steps to find a financial planner.

You can find our guide on the best term life insurance companies here.

Your life insurance needs will fluctuate as your financial and individual situation does. Regular reviews ensure that your coverage amounts remain accurate over time and you're not overpaying for excessive coverage. For example, you may want to purchase additional insurance if a child enters the family or decrease your insurance when your children become adults and leave home. 

Be aware that increasing your policy may mean you have to undergo additional underwriting requirements, such as another medical exam or health questionnaire. Also, if you want to decrease your coverage, some insurers may have limitations. 

Review your life insurance coverage at least every few years or after significant life events such as marriage, childbirth, purchasing a home, or retirement.

Certain types of life insurance policies, like whole life or universal life, include a cash value component that grows your policy's value over time. You can withdraw or borrow from your cash value to pay for financial goals, such as retirement, your child's education, or long-term care expenses.

If you're single, life insurance can help you cover debts if you have a co-signer, final expenses, or costs to keep your business running. You can also use life insurance to build a financial legacy for loved ones or donate to charities.

Generally speaking, your financial obligations decrease over time (i.e., as your children leave the house, your mortgage gets paid off, etc.) So, younger individuals may need more coverage to cover those long-term financial obligations. Older individuals may carry less coverage, instead focusing on covering final expenses and leaving an inheritance.

Many life insurance companies and financial planning websites offer online calculators to estimate your life insurance needs based on your financial situation and goals.

• Real estate/mortgages
• Retirement planning
• Small business finances

• Main content

Shooter ‘had plan’ before killing himself in Chattanooga office building, police say

Police urged the public to avoid the area..

CHATTANOOGA, Tenn. (WSMV) – A suspect is dead after a reported shooting inside an office building in Chattanooga, according to the Chattanooga Police Department.

That suspect, who died by suicide, “had a plan,” according to authorities. Chattanooga police did not specify Monday afternoon whether that plan included hurting people or whether shots were fired at anyone. No one else was hurt, police said.

PUBLIC ALERT CPD is at 2034 Hamilton Place Blvd. for a potential active shooter situation. Please avoid the area at this time. Updates to come. To our media partners: The media staging area is at 2020 Gunbarrel Road. — Chattanooga PD (@ChattanoogaPD) June 24, 2024

Earlier Monday, police posted on X about the potential shooting and urged the public to avoid the area near Hamilton Place Boulevard and surrounding businesses to shelter in place. Those working inside the mall told NBC affiliate Local News 3 that they were under lockdown after the intercom announced a report of shots fired. Those lockdowns were being lifted as of 3 p.m.

The shooting location, 2034 Hamilton Place Blvd., is an office building located near Marshalls and Santi’s Mexican Grill, according to Local News 3 , an NBC affiliate in Chattanooga.

This is a developing story. Check back for updates.

Copyright 2024 WSMV. All rights reserved.

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Election latest: Rishi Sunak accused of 'behaving badly' in final debate - as he and Keir Starmer get brutal audience question

Follow reaction and fallout from the final head-to-head between the prime minister and Labour leader ahead of polling day on 4 July.

Wednesday 26 June 2024 23:00, UK

• General Election 2024

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Sunak and Starmer's final debate

• Voters can't pick a winner in snap poll
• Labour frontbencher says PM 'behaved badly'
• Audience member asks brutally blunt question
• Starmer says Sunak 'bullied into action' over betting
• 'A deal with the Taliban?' - PM mocks Labour's migration plan
• Jon Craig: No love lost between Sunak and Starmer - and it showed
• Sam Coates: Sunak put his opponent on the spot - but poll shows strategy didn't win over public
• Live reporting by Faith Ridler , Ollie Cooper   and   Katie Williams
• Police to investigate betting scandal cases
• Protester climbs on top of Tory campaign bus
• Man arrested in honeytrap scandal | Labour suspends suspect

Election essentials

• Manifesto pledges: Conservatives | Greens | Labour | Lib Dems | Plaid | Reform | SNP
• Trackers:  Who's leading polls? | Is PM keeping promises?
• Campaign Heritage:  Memorable moments from elections gone by
• Follow Sky's politics podcasts:  Electoral Dysfunction | Politics At Jack And Sam's
• Read more:  Who is standing down? | Key seats to watch | What counts as voter ID? | Check if your constituency is changing | Guide to election lingo | How to watch election on Sky News

Thanks for joining us for an extremely busy night here in the Politics Hub, including for the final debate between Rishi Sunak and Sir Keir Starmer before the general election next Thursday.

You can scroll through the page to catch up with the highlights.

And we'll be back from 6am with all the very latest.

Until then - read all the latest from Sky News below:

By  Tim Baker , political reporter, in Nottingham

One of the more amusing moments of the debate tonight was Robert, who told Rishi Sunak he was a "mediocre" prime minister and said Sir Keir's strings were being pulled by senior members of the Labour Party.

He is brought into the spin room by BBC production staff for journalists to talk to.

He tells us that he is a life-long Conservative voter - but at the moment is undecided.

Robert says he has recorded the debate and will be watching it again when he gets home.

However, he reckons he is leaning towards the Conservatives - believe Sir Keir has an "undeclared agenda".

Daisy Cooper, the deputy leader of the Liberal Democrats, has said the UK "deserves so much better" than the leaders' debate held tonight.

Reacting to the clash between Rishi Sunak and Sir Keir Starmer, she said: "Tonight the audience spoke for the nation when they asked: is this really the best we've got?

"Our country deserves so much better than what we watched this evening.

"Liberal Democrats are listening to you and fighting hard for the issues that matter to people. 

"From the NHS to tackling the cost of living, we want a fair deal for our country.”

A Conservative win would mean "five more years of chaos" and Rishi Sunak has shown tonight "just how out of touch he is", Labour's campaign coordinator has said.

Reacting to the leader's debate, Pat McFadden said Sir Keir Starmer "exposed the Tory manifesto as unfunded".

"Keir Starmer and Labour will return politics to public service, putting country before party in stark contrast to partygate and dodgy COVID contracts," he said.

"On 4 July, we have a chance to turn the page and start to rebuild with Labour."

Tonight was an "important moment" for Rishi Sunak as he put his opponent "on the spot", says our deputy political editor Sam Coates .

Coates says he thinks the prime minister would have been "very happy" with his performance - and adds that some of his aides were even "punching the air" after the debate.

It was a performance Mr Sunak "desperately needed earlier in the campaign", he adds.

He says Mr Sunak had a "clear strategy... to demand answers from Keir Starmer on tax and whether it will go up, on welfare and how you get people off benefits, on 'smashing the gangs' and whether the Rwanda policy is needed..."

Coates says Sir Keir provided a "range" of answers as the prime minister sparred with him.

"Sometimes he had specifics, sometimes he did not," he says.

"That strategy, although executed in a way I think that the Conservative Party tonight is very happy with, has nevertheless been judged not decisively in Keir Starmer or Rishi Sunak's favour," says Coates, referring to the YouGov poll showing there was no winner in the final debate of the election (see 21.38 post).

The final TV clash of the election campaign was an ill-tempered shouting match, at least from Rishi Sunak. 

Sir Keir was more measured. More prime ministerial, perhaps?

As he had to as the underdog, Mr Sunak went on the attack from the start until the very end and unveiled a new campaign slogan: "Don't surrender…"

He said it no fewer than 15 times during the 75-minute debate. That’s once every five minutes.

But just like the England-Slovenia Euros match 24 hours earlier, the result was a draw: 50%-50% exactly, according to pollsters YouGov.

At the outset, the PM served notice that he wanted to talk about tax, while Sir Keir wanted to talk about politicians gambling. 

As Mr Sunak read out prepared lines, it was a smart ad lib from Sir Keir that won the first round of applause.

"If you listened to people in the audience a bit more you might not be so out of touch," he said, in a familiar Labour attack line.

But the PM was strong and came out on top in exchanges on illegal migrants crossing the Channel.

One of the best moments came when a member of the audience, Robert, asked a devastating question: "Are you two really the best we’ve got to the next prime minister of our great country?"

By the end, the debate closed out as it began - with Mr Sunak shouting over the Labour leader. It wasn't a good look.

And as the debate ended, there was no handshake between the pair, which is unusual for these TV clashes. 

At least party leaders pretend to be civilised towards each other usually.

There's clearly no love lost between these two - and it showed.

Darren Jones, shadow chief secretary to the Treasury, is among the Labour representatives in the spin room this evening.

He's asked first about his leaked comments that Labour's target for decarbonising the economy will cost "hundreds of billions" of pounds.

Sir David Davis, who sticks around for this encounter, asks why Mr Jones's party "downgraded" their net zero plans.

"Because you guys crashed the economy," the shadow chief secretary responds.

Sunak 'behaved badly' in debate

On the leader's debate, Mr Jones says Sir Keir Starmer came across as "clearly more prime ministerial" - and adds that he thinks Rishi Sunak behaved "quite badly".

"He didn't answer questions that were put to him and was constantly speaking over Keir and Mishal [Husain, the BBC host]."

He denies Sir Keir's remarks that Mr Sunak is out of touch were "below the belt".

"Rishi Sunak is going around the country telling everyone that they've never had it so good... they crashed the economy, people at home know that because they paid the price for it."

Up to spin for the Conservatives is ex-minister David Davis.

"This debate was very important," he says, noting it's the final one before the public decides who to back.

He was a fan of Rishi Sunak's new attack line - the repeated pleas to voters not to "surrender" their borders or finances to Labour. 

"[Sunak has] faced a once-in-a-generation issue in terms of a war in Europe, he's faced a once-in-a-century issue in terms of a pandemic, and he did it with an economy from which we'd inherited massive debts in the past," he adds.

After all that, "he managed to get inflation down from 11% to 2% in six months". 

"The public will look at this and say: 'We've got a difficult world, all sorts of disruptions at home and abroad, who will deal with it the best of these two'?" he says.

"I know who I'll be voting for."

With minutes to go, a group of smiling Labour spinners arrived to watch the final summations.

Darren Jones - under fire for his comments about the cost of going for net zero, revealed in The Telegraph - tells Sky News it's clear who was more prime ministerial during the debate.

He and the other Starmer backers then burst away to the various cameras and microphones to talk up their leader.

Meanwhile, serious faced Conservatives enter from the other end of the room to give their verdicts. 

Tory candidate - and former minister - David Davis says he thinks Rishi Sunak's repetition of the "surrender" phrase will have gone down well.

This just in from YouGov - which has found there was no winner in tonight's BBC leaders' debate, the last of the general election campaign.

Asked who performed best - the results came in exactly 50/50.

Our deputy political editor Sam Coates says there will likely be disappointment in the Conservative ranks over this result.

"Neck-and-neck polling doesn't seem to me like it's going to change the race," he says.

"I think there's a really interesting question about Rishi Sunak's tactics, in my view, watching that, he was effective in highlighting the choice - the policy difference between the two men.

"I wonder looking at that poll whether that's what the public are really looking for."

However, there were distinctions when viewers were asked who performed better on certain topics.

Rishi Sunak came out on top on immigration and tax, while Sir Keir Starmer performed better on welfare and the UK's relationship with the EU.

Labour also just edged ahead on the economy - with 47% saying they performed better, and 43% backing the Tories.

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