M&A Deal Lifecycle Flashcards
(30 cards)
What are the main stages of the M&A deal lifecycle?
Strategy & Target Identification
Initial Approach & NDA
Indicative Valuation & LOI
Due Diligence
Deal Structuring & Negotiation
Legal & Regulatory Approvals
Deal Closing
Post-Merger Integration (PMI)
Why is understanding the full lifecycle important for M&A professionals?
To manage risks, ensure smooth execution, and align deal value with strategic goals.
What is the purpose of the strategy & target identification phase in M&A?
To define the rationale for the deal and identify potential acquisition targets.
What tools are used to screen potential M&A targets?
Capital IQ, PitchBook, Bloomberg, industry databases, banker networks.
What is meant by “strategic fit”?
The degree to which a target aligns with the acquirer’s goals, culture, and capabilities.
What is a teaser in M&A?
A 1-page, anonymous company overview sent to potential acquirers to gauge interest.
What is an NDA and why is it signed?
A Non-Disclosure Agreement - to legally protect sensitive information shared during discussions.
What is an Information Memorandum (IM)?
A detailed document providing financial, operational, and strategic details about the target.
What is an LOI?
Letter of Intent - a non-binding proposal outlining the acquirer’s offer and terms.
What does an LOI typically include?
Indicative price, deal structure, financing info, due diligence timeline, exclusivity period.
Is the LOI legally binding?
Mostly no, but some clauses like exclusivity or confidentially may be binding.
What’s the danger of making an LOI too early?
You may overpay or miss hidden risks before proper due diligence.
What is due diligence in M&A?
A detailed investigation into the target’s finances, operations, legal, tax, HR, and more.
What’s the purpose of due diligence?
To validate deal assumptions and identify risks before committing to the transaction.
What is a data room in M&A?
A secure platform where the seller shares confidential documents with potential acquirers.
Name three areas of due diligence.
Financial due diligence, legal due diligence, operational due diligence.
What happens if red flags appear in due diligence?
The acquirer may adjust the price, walk away, or renegotiate terms.
What is a definitive agreement?
A legally binding contract that finalizes the terms of the deal.
What is a MAC clause in M&A?
A “Material Adverse Change” clause - allows the buyer to walk away if something bad happens before closing.
What are “reps and warranties”?
Legal promises made by the seller about the business’ condition and accuracy of information.
What’s the difference between an asset purchase and a share purchase?
Asset purchase = selected assets/liabilities, not the entire company.
Stock purchase = buying the whole company’s equity.
What is an earnout?
A portion of the purchase price that is paid only if the target meets performance goals post-close.
Why are regulatory approvals needed in M&A?
To ensure the deal doesn’t harm competition or breach national security laws.
What agencies may be involved in regulatory review?
FTC (US), European Commission (EU), CFIUS (US Foreign Investment), industry regulators.
