Merger and Acquisition process:

1) Determine Growth Markets/Services:

Leaders start the acquisition evaluation process by identifying growth opportunities in business
or service lines, markets served, or any combination thereof. To determine growth markets and
services, leaders must collect and analyze extensive data, including the following: client origin;
demographics (population, age, employment/unemployment rates, income); employers; other
competitors; business, program, and service mix (performance and profitability by service line);
field staff.

2) Identify Merger and Acquisition Candidates:

The second step of the acquisition process involves the proactive identification of the universe
of potential merger or acquisition candidates that could meet strategic financial growth
objectives in identified markets or service lines. This involves methodically identifying “likely
suspects” as well as “outside the box” possibilities based on management experience, research,
the use of consultants, and other methods.
3) Assess Strategic Financial Position and Fit:
At this stage following questions shall be answered,
What are the likely benefits of a transaction with this acquisition target?
What are the risks?
How does this target compare to other targeted opportunities?
4) Make a Go/No-Go Decision:
Corporate leadership must determine the likely benefits and drawbacks of the proposed
acquisition or merger according to the questions discussed earlier and make a high-quality
decision. During the decision-making process, leaders identify whether the strategic value-
added case for a combined entity is compelling enough to proceed (or not).
5) Conduct Valuation:
The fifth step in the acquisition process involves assessing the value of the target, identifying
alternatives for structuring the merger or acquisition transactions, evaluating these, and
selecting the structure that would best enable the organization to achieve its objectives, and
developing an offer. There are three key valuation methods: discounted cash flow analysis,
comparable transaction analysis, and comparable publicly traded company analysis. To identify
a realistic valuation range, corporate leadership should select best suitable method.
6) Perform Due Diligence, Negotiate a Definitive Agreement, and Execute
Transaction:
Once an offer on the table is accepted, leaders of the acquiring organization must ensure a
complete and comprehensive due diligence review of the target entity in order to fully
understand the issues, opportunities, and risks associated with the transaction. Due diligence
involves a review of the target’s financial, legal, and operational position to ensure an accuracy
of information obtained earlier in the acquisition process and full disclosure of all information
relevant to the transaction.
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 7) Implement Transaction and Monitor Ongoing Performance:
The analysis seeks answers to such questions as,

 Will management make the tough operational changes required to achieve the financial
benefits?
 What are the HR implications? Is there constituent support (management, board, service
providers, community, and employees)?
 What are the legal and regulatory challenges (Court approvals, SEBI Regulations, Tax
implications, etc)?
 What are the financial, organizational, and community-related risks of failure?

2) Parties included in merger and acquisition process:

Purchaser.  Every M&A transaction involves at least one purchaser, or buyer, the party that will
be making the acquisition. This is the person (i.e., individual or company) that signs the purchase
agreement, pays the purchase price and which, after closing, directly or indirectly, owns or
controls the target company or its assets. The purchaser also will work with the seller or target to
establish the primary financial and strategic terms of the transaction, lead negotiations of key
deal points, manage operational and financial due diligence and select and supervise transaction
advisers, which includes an assortment of lawyers, investment bankers, accountants, proxy
solicitors and others.

Seller.  The seller in an M&A transaction is the person or persons selling the equity securities or
assets and liabilities being purchased by the purchaser. Unlike the purchaser, every deal does not
necessarily involve a seller acting as a deal participant. For example, in transactions where the
target is a publicly-traded company, although public shareholders are effectively selling the
company and, accordingly, may be thought of as the sellers, the Board of Directors and
management of the target company itself usually take on the role that would be played by a seller
in a private deal.

Target.  The term “target” is generally used to refer to a company, as opposed to assets,
ownership or control of which will be acquired in the M&A transaction. It may refer not only to
the subject of a private M&A transaction but of a public deal, as well. The term is not used in
transactions involving a sale of assets and liabilities, where “Acquired Assets” and “Assumed
Liabilities” are in play

Target Board of Directors.  The members of the Board of Directors of a corporation owe
fiduciary duties to the company’s stockholders. This means directors must act for the benefit of
the stockholders, while subordinating their own interests. In public M&A transactions or private
deals in which there is a diffuse stockholder base or which involve a conflict of interest
impacting a controlling stockholder, these fiduciary duties may require the target Board of
Directors (or a committee comprised of disinterested directors)

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M&A Lawyers.  The principal parties to M&A transactions each engage their own attorneys,
who may be in-house attorneys but are more frequently M&A specialists practicing with outside
law firms. These lawyers provide a number of services to their clients, including:

 advising on transaction structure and timing

 conducting or facilitating legal due diligence (i.e., the review of contracts, permits,
organizational documents and other materials of the target company, or governing the
subject assets, to develop an understanding of the scope, value and risks of the
transaction)
 rendering advice on fiduciary duties and minority stockholder rights, such as dissenters’
rights.

Specialist Attorneys.  Large or more complex M&A transactions often also require involvement
by lawyers who specialize in certain areas of law. Depending on the deal, this may include,
among others, lawyers who concentrate on antitrust, real estate, regulatory, securities,
compensation and benefits, labor, environmental, tax, intellectual property, privacy or foreign
law. These attorneys may assist with due diligence as well as negotiating and drafting transaction
agreement provisions in their respective areas.

Investment Bankers.  Investment banks, also called financial advisers, provide financial and
strategic advice to purchasers, target companies and sellers. On sell-side engagements, they may
be the first advisers contacted at the commencement of a potential transaction and will advise
management and the Board as to potential buyers, prospective deal terms, timing and the process
for marketing the transaction, among other things .

Others.  A number of other parties may play a role in an M&A transaction. While undoubtedly
important, these parties generally play tangential roles.

 Banks and other sources of financing provide purchasers all or a portion of the cash they
need to finance the purchase price.
 Independent accountants assist with due diligence, public disclosures and preparation of
pro forma financial statements.
 Escrow agents are independent third parties, usually financial institutions, to which a
portion of the purchase price in private M&A transactions is paid to backstop all or part
of a seller’s post-closing indemnification obligations.
 Proxy solicitors assist principals in public M&A deals in soliciting shareholder consent to
the transaction.
 Exchange / paying agents, in public deals, facilitate the payment of transaction
consideration, withholding taxes, collecting shareholder payment instructions, verifying
holdings and collecting tax forms.
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