M&A timeline for deal completion can often feel like a labyrinth, filled with intricate phases that dictate the entire transaction flow. From the initial planning and target identification to the due diligence and regulatory approvals, each phase requires careful attention and strategic planning.

In this guide, we break down the key M&A phases and highlight what you can expect during this process. You can discover essential insights about each stage, including timelines, best practices, and potential challenges. 

Understanding the key M&A deal phases

As is known, the M&A process is a multi-phase procedure. Everything starts with the M&A planning phases, where goals and strategies are mapped out. Next is due diligence, a deep analysis to confirm the viability and risks of the transaction. After that comes the negotiation phase, where parties discuss terms. Once all is set, the deal must pass regulatory approvals to meet legal and compliance standards. Finally, the M&A integration process ties everything together, blending cultures, systems, and operations to unify the companies.

These M&A steps are foundational to any deal and ensure a structured approach. Therefore, each of the following phases is crucial in minimizing risks, strengthening strategic alignment, and setting the stage for a smooth integration.

Phase 1: Identifying a target and preparing for a merger and acquisition

Commonly, it takes several months to over a year to identify an acquisition target. This phase requires a thorough understanding of the acquirer’s goals and an organized approach to prospecting suitable candidates. Initial steps include establishing a clear acquisition strategy, defining target criteria, and conducting market research to shortlist potential companies that align with the acquirer’s objectives.

How to identify an acquisition target?

Find the best target by following the steps below:

✔️Define strategic goals. Determine what you want to achieve through the acquisition—growth, diversification, market-entry, or new technology. This clarity will shape your target criteria.

✔️Set target criteria. Establish criteria based on size, location, financial health, market share, customer base, and cultural fit. These specifics narrow your search and make evaluation easier.

✔️Research and shortlist. Use databases, industry reports, and networking to gather potential targets. Analyze each against your criteria and shortlist those with the best fit.

✔️Conduct preliminary assessments. Review public financial information, industry performance, and market positioning for each potential target to gauge feasibility.

✔️Reach out for initial interest. Make discreet initial contact with top prospects to gauge interest and compatibility, setting the stage for a deeper evaluation.

✔️Refine the list based on feedback. Based on responses and initial findings, adjust your list to include only those with strong potential.

Once potential targets are identified, a team can prepare for M&A. It involves financial assessments, preliminary valuations, and sometimes initial outreach to gauge interest. By setting a strong foundation and using effective tools for research, companies can better manage expectations, avoid common pitfalls, and set the stage for a smoother M&A journey.

Phase 2: Conducting due diligence

M&A due diligence is a detailed process of verifying and evaluating a target company’s standing for an informed acquisition decision.

Types of due diligence 

Here is what the investigation may include:

• Financial due diligence reviews revenue trends, profit margins, liabilities, and cash flow.
• Legal due diligence inspects contracts, regulatory compliance, and litigation risks.
• Operational due diligence focuses on workforce, assets, and supply chain viability.
• Tax due diligence inspects the target’s tax compliance, potential liabilities, credits, and ongoing disputes with authorities.
• Commercial due diligence analyzes market position, competition, customer base, and growth potential to validate the company’s commercial viability.

👁️‍🗨️Types of due diligence 

What are due diligence challenges?

Commonly, teams face slow data access to documents, unresponsive stakeholders, and complex historical data. So, establish clear timelines, set up a communication protocol, and use structured checklists for avoiding due diligence delays.

Additionally, consider using virtual data rooms. This feature-rich technology provides a secure platform for sharing sensitive documents, allowing all stakeholders to access necessary information quickly. It reduces the time spent on document retrieval and minimizes the risk of lost or misplaced files.

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Each step requires collaboration across departments and expertise from specialists. Therefore, the due diligence process is a time-consuming yet crucial phase for mitigating risks post-acquisition.

Phase 3: Negotiating terms and valuations

At this stage, both parties discuss and finalize the terms of the deal, including the offer price and legal structuring. This phase typically begins once due diligence is completed and involves detailed discussions on the target company’s valuation and the agreement’s specific terms.

Here are some key aspects:

1. Determine business valuation. Both parties must agree on the target company’s value, often using discounted cash flow analysis, comparable company analysis, and precedent transactions. The M&A valuation timeline can vary, typically taking several weeks, depending on the complexity of the financials and the availability of necessary data.
2. Discuss offering price. Based on the business valuation, the acquiring business presents an initial offer. This price may be adjusted following further discussions or additional findings from due diligence.
3. Negotiate M&A terms. In addition to M&A purchase price negotiation, parties discuss payment structure (cash, stock, or a combination), warranties, indemnities, and conditions precedent.
4. Consider legal structuring. This step identifies the most suitable structure for the transaction. It can be an asset purchase, stock purchase, or merger. Since legal structuring impacts tax implications and liabilities, it is important to consider these factors during negotiations.

The duration of this phase varies based on the deal’s complexity and parties’ willingness to compromise. Typically, it can last from a few weeks to several months. Factors influencing the timeline include the number of issues to negotiate, the parties negotiating styles, and how quickly both sides can reach a consensus.

M&A: Why do Mergers & Acquisitions fail? — Sampford Advisors – Expert Tech M&A Advisor (Software, IT Services, SaaS, Hardware) 

👁️‍🗨️ Negotiating M&A deal terms 

Phase 4: Obtaining M&A regulatory approval

This step ensures that the transaction complies with applicable laws and regulations. Government bodies, such as antitrust authorities and industry regulators, play significant roles in this phase, either delaying or accelerating the timeline based on their assessments.

Here are some key aspects:

1. Submission of documentation. After negotiations are finalized, the acquiring company submits the necessary documentation to relevant regulatory authorities. It includes details about the transaction, business operations, and how the merger will affect market competition.
2. Antitrust review. Regulatory bodies conduct an antitrust review process to determine whether the merger may create a monopoly or reduce competition in the market. It involves an examination of market share, pricing power, and potential impacts on consumers.
3. Stakeholder involvement. Regulators may seek input from competitors, customers, and industry experts to understand the broader implications of the merger.
4. Government agencies’ role. Depending on the jurisdiction, different government approval for mergers may be involved, each with its processes and timelines. Their willingness to expedite reviews or impose additional scrutiny can affect how long the phase lasts.

👁️‍🗨️Regulation and M&A: How Scrutiny Raises the Bar for Acquirers | Bain & Company 

Phase 5: Finalizing and integrating the deal

Closing M&A deal involves completing the formal transaction and beginning the M&A post-acquisition integration process to unite the two companies.

Here are some key aspects:

1. Steps to closing the deal

Once the steps in M&A regulatory approval process have been completed, both parties finalize M&A. For this, they sign legal documents, transfer funds, and make announcements to stakeholders, employees, and the public. This step ensures all contractual obligations are fulfilled and secures the deal’s closure.

2. Post-acquisition integration

At this step, the parties merge operations, align company cultures, consolidate systems, and implement agreed-upon strategic initiatives. Integration timelines vary based on the complexity of the businesses, often spanning from a few months to over a year.

3. Challenges and best practices

Successful integration depends on clear communication, alignment of goals, and proactive management of cultural differences. To ease this transition and maximize the long-term value of the acquisition, set measurable goals, assign dedicated integration teams, and maintain an open line of communication.

How can virtual data rooms help with M&A integration steps?

Virtual data rooms provide a complete and secure solution for the final stages of M&A deals. These servers are optimized for high-speed access, redundancy, and data protection, regardless of the user’s local storage type, HDD or SSD. Thus, all essential documents are available whenever needed.

Additionally, with one search word enter you can quickly locate specific files, reducing the need to log extensive hours manually searching. Teams can also mark files as important or create a new bookmark for faster navigation, which helps track progress, especially during the intense test phase of integration.

Each user has a secure user name and permission controls for better document security and accountability. Additionally, the ability to track who accessed which files—along with logs showing changes—ensures transparency and effective oversight.

Once the necessary documents are completed and the due diligence phase is done, stakeholders can confidently move into integration.

From the initial file sharing and approval steps to the M&A post-integration, data rooms provide an organized and secure environment for M&A deals.

To sum up

We present an outline of each step in the M&A deal completion process to summarize everything we have discussed. This timeline highlights the key phases, the tasks associated with each stage, and the expected durations.

Timeline for M&A deal completion

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