M&A

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

1. Horizontal merger: Occurs between companies in the same production stage and industry.
2. Vertical merger: Occurs between companies in the same industry but on different levels of supply chains. 
3. Concentric merger: Occurs between companies in related but not competitive industries.
4. Conglomerate merger: Occurs between companies in unrelated industries.
5. Hostile takeover: Occurs when an acquiring company takes a controlling stake in the target company against its will.
6. Merger of equals: Occurs between companies of the same size and forms a joined entity.
7. Divestiture: It occurs when a company sells its business units, assets, or subsidiaries.
8. M&A lifecycle: Encompasses M&A stages — planning, due diligence, closing, and post-merger integration.
9. M&A due diligence: Occurs when an acquiring company investigates the target company before a transaction.
10. Sell-side due diligence: It occurs when a target company prepares for a merger or acquisition.
11. M&A integration: Occurs when an acquiring company combines and rearranges operations of the target company post-acquisition.
12. 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:

1. 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.
2. Integrated due diligence. It investigates dependencies between business functions and emphasizes commercial excellence, strategic alignment, and operational efficiency. 
3. 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.
4. 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:

1. M&A best practices
2. Guides to various types of M&A transactions
3. Risk management and compliance practices in M&A transactions
4. M&A checklists
5. And more

Our M&A articles help dealmakers, M&A advisors, entrepreneurs, auditors, and other M&A professionals.