M&A
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Mergers and acquisitions occur when two or more companies join forces or consolidate assets through financial transactions.
Although often used interchangeably, mergers and acquisitions are different concepts:
- Merger. It occurs when an acquiring company purchases the target company to create a new joint company. They merge business functions to achieve corporate synergies.
- Acquisition. It occurs when an acquiring company buys a controlling stake in the target company and doesn’t necessarily pursue a merger. It may absorb the target company entirely or make it a subsidiary.
Our mergers and acquisitions blog explains all the ins and outs of M&A transactions, including strategies, challenges, and industry practices.
Key M&A terms
- Horizontal merger: Occurs between companies in the same production stage and industry.
- Vertical merger: Occurs between companies in the same industry but on different levels of supply chains.
- Concentric merger: Occurs between companies in related but not competitive industries.
- Conglomerate merger: Occurs between companies in unrelated industries.
- Hostile takeover: Occurs when an acquiring company takes a controlling stake in the target company against its will.
- Merger of equals: Occurs between companies of the same size and forms a joined entity.
- Divestiture: It occurs when a company sells its business units, assets, or subsidiaries.
- M&A lifecycle: Encompasses M&A stages — planning, due diligence, closing, and post-merger integration.
- M&A due diligence: Occurs when an acquiring company investigates the target company before a transaction.
- Sell-side due diligence: It occurs when a target company prepares for a merger or acquisition.
- M&A integration: Occurs when an acquiring company combines and rearranges operations of the target company post-acquisition.
- Corporate synergy: A performance boost that occurs when companies complete post-merger integration.
What makes M&A successful?
Here are the best industry practices to boost M&A success rates:
- Programmatic M&A. Companies see better results while acquiring small targets frequently (at least once a year) rather than engaging in life-changing deals that take over 30% of their market cap.
- Integrated due diligence. It investigates dependencies between business functions and emphasizes commercial excellence, strategic alignment, and operational efficiency.
- M&A technology. Data analytics solutions and virtual data rooms simplify due diligence, remove the administrative burden, and facilitate deal coordination. M&A technology provides a secure, compliant, and accessible decision-making environment.
- Cultural integration. Cultural alignment improves communications on all levels, reduces misunderstandings, and prevents excessive talent loss. Thorough cultural due diligence and immediate action are required for successful post-merger integration.
Navigating M&A topics
Our guide to mergers and acquisitions conveys the following topics:
- M&A best practices
- Guides to various types of M&A transactions
- Risk management and compliance practices in M&A transactions
- M&A checklists
- And more
Our M&A articles help dealmakers, M&A advisors, entrepreneurs, auditors, and other M&A professionals.
01 July 2024
M&A Pipeline Essentials: Stages, Practices, and Management Solutions
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Post-merger integration framework: Best practices + software solutions
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22 September 2023
60 M&A Questions to Ask During Integrated Due Diligence
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14 March 2023
Why Mergers and Acquisitions Fail: Top 9 Problems and Solutions
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