When two businesses merge in New York (or one purchases the other), it is the buy-side of the transaction that is responsible for completing the deal. This side of M&A includes the buyers, their financiers and their legal and financial advisors. The mergers and acquisition process can take forever or just a couple of months (or weeks), depending on the deal’s complexity.
How the process begins
The buy-side in mergers and acquisitions typically begins by forming a bidding group, which could include private equity firms, corporate buyers or banks. This group will then assess the value of the target company and decide whether or not to make an offer. In some cases, this requires conducting due diligence on the target company – including reviewing its financials, operations, management team and more.
Opening dialogue
The seller’s board of directors must take into consideration the offer that the buy-side has made. If accepted, negotiations between both sides will continue until they reach a definitive agreement – outlining what each side will receive in return for their participation in the merger or acquisition. The buy-side may also have to negotiate with the target company’s financiers and lenders to obtain their approval for the deal.
Closing the deal
The buy-side will also have to do a lot of paperwork to close the deal. This could include due diligence reports, financing documents and contracts signed by both sides. Once all parties involved have agreed on terms, the merger or acquisition is complete.
Financing
The buyers may need to finance part of the purchase price through debt or equity capital raised from outside investors. The investment banks acting as lead advisors on the deal might arrange for these investments or loans – although some buy-side firms prefer to raise their own money instead.
Mergers and acquisitions are complex deals that require a deep understanding of the process, as well as a combination of legal and financial expertise. Regardless of how long or complicated it is, it’s essential to ensure that your interests, rights and investment are safe from the start to the completion of the deal.