Your virtual data room is all set and you are ready to enter the primary stage of due diligence in your merger or acquisition transactions. As well as, actions in the pre-due-diligence phase depend upon whether the process is seller-driven or buyer-driven. In this blog, we will discuss about M&A Lifecycle for secure document sharing.
In the second part of our M&A process, we will continue from the last point in the planning stage discussed at the end of the previous part of our M&A series.
Competitive Sale Process
The planning stage is that part of M&A where the sequence and timing of the release of seller identified documentation to the buyer are decided and then released. In fact, the interested parties get permission to access these documents. Now, the vendor’s management group gives them the entry to the data room to kick start the process.
Deal Communication
It is well understood that an M&A deal comprises lots of communication between the seller and the buyer. The benefits of using the VDR for corporate communication include:
- A Q&A feature that enables parties to ask questions
- Automatic daily or weekly updates
- Alerts generated by the system
Investment bankers are typically involved in the coordination of Deal Communication. Also, they provide comprehensive answers according to the interest of the prospective buyers.
Letters of Intent
The selection of the bidders and procedure to review securely the Letter of Intents (LOI) become feasible within the data rooms when they are submitted during due diligence.
Meetings
Few mergers and acquisitions are completed without the requirement to plan and coordinate several meetings. Before submitting a bid, many potential buyers prefer to do site visits to see the seller’s operation for themselves.
Drafting SPAs
The buyer and seller can begin negotiating the sale-purchase agreement (SPA) if the due diligence procedure appears to be proceeding well and no legal difficulties occur to cause the process to be delayed. This describes every facet of the transaction, including:
- Date of ownership
- Purchase price
- Payment terms
- Transfer of assets
- Employee impact and compensation
One on One Process
If the process is driven by the buyer, then there are only two parties involved in the deal: the buyer & the seller.
The buyer begins due diligence by reviewing the seller’s paperwork, which is usually the data he sought during the pre-due diligence step. Also, this allows the buyer to figure out what information is required to submit a Letter of Intent (LOI), ask questions about specific papers, and seek extra information for clarification.
The deal’s numerous advisors write a preliminary report summarizing their key findings and submit it with an LOI to show the seller that the bidder is serious.
The numerous advisors analyze the reports and findings to ensure that no major issues have been ignored. Also, the buyer decides whether or not to proceed with the bid’s final submission. If so, whether or not to include a first mark-up of the SPA and/or to request exclusivity.
