Company mergers and acquisitions are a complicated topic, but it doesn’t have to be. In this article, we’ll break down the process of mergers and acquisitions into simple steps that you can take if your company is considering merging with another or acquiring someone else’s company. This article will also discuss the crucial roles that are relevant during company mergers and acquisitions.
Mergers and Acquisitions
For those who are unfamiliar, mergers and acquisitions are defined as business transactions where one company acquires or merges with another. These types of deals can be very successful for both companies involved, but they also come with a lot of risks. The biggest challenge is determining which company should lead and who will take charge in management decisions when joint-leadership roles are needed.
There are many other aspects to consider when deciding whether a merger or acquisition will be successful, but this article focuses on the roles that people play in these complicated business transactions.
Crucial Roles in Company Mergers and Acquisitions
Company mergers and acquisitions can be a complicated discussion, especially for those not directly involved with the changes. There are five significant stakeholder groups involved in company mergers and acquisitions: the C-suite and investment committee, business unit leadership, corporate development, transaction lead, and external advisers.
C-suite and Investment Committee
Not all of these stakeholders will be involved in every merger and acquisition, but it is good to know who they are.
The C-suite and investment committee consists of the CEO, Chief Financial Officer (CFO), Chief Operating Officer (COO), President, and other executive-level members that make up the company’s board of directors. These people typically play a significant role in evaluating deals worth over $100 million dollars.
These are individuals that are involved with major decisions. Other roles of the investment committee (IC) includes:
- Determining the company’s long-term strategy. They will also decide what companies to buy out and how much they should pay for them.
- They are responsible for ensuring that any acquisition does not put too big of a strain on the company financially or risk its reputation in other ways, such as having an ethics scandal if it is revealed that someone from the IC was involved with wrongdoing.
- An essential role for the IC is developing a thoughtful plan to handle any significant changes after an acquisition.
In general, the C-suite and investment committee are responsible for management decisions.
Business Unit Leadership
The business unit leadership group includes general managers and divisional vice presidents from each department within the organization. They weigh in on decisions relating to how operations will change and their duties during this period following a successful deal completion.
The business unit’s role is more crucial towards the end of the process and for the next few weeks following a merger or acquisition.
The individuals assigned to these roles will be tasked with making the company’s new strategy for success. This group can be challenging for smaller companies, but it is crucial to determine a plan that works for both companies involved.
Corporate Development
Corporate development teams are involved in day-to-day negotiations for mergers and acquisitions. They are typically a part of the company’s legal team and include in-house lawyers, investment bankers, or consulting firms.
Another important responsibility of the corporate development team is determining what the company’s priorities should be and how they will go about achieving those goals.
Teams involved in corporate development are also crucial to the sale of the company. They will generally have a role in deciding on how to price an acquisition offer, what type of financing is necessary, and who should be involved with negotiations.
Transaction Lead
The transaction lead is responsible for taking care of the paperwork, managing tasks, and keeping everyone on track during these transactions. They ensure that everything goes smoothly from beginning to end, including drafting contracts or negotiating terms with another party involved in a potential acquisition.
Compared to the other groups, transaction lead teams are usually involved at the end of a merger or acquisition. Individuals with prior experience in business acquisitions or mergers are typically the best for this role.
External Advisers
External advisers might be brought into discussions when more expertise is required for certain aspects of the deals. This could mean that outside consultants are used who specialize in a particular service or skill set, such as mergers and acquisitions.
External advisers also provide assistance in areas where the company has a lack of knowledge. This could be in one or more areas, such as finance and accounting, human resources, legal counsel, information technology (IT), marketing communications and strategy, operations management/operations development, organizational behavior, and skills development for change management.
Conclusion
The different stakeholders who may be involved in a merger or acquisition can have an impact on how the negotiations go. This article focused on those five specific groups and their roles to keep it simple with this complicated topic.
These groups are essential for both parties of the deal, but they also come with many risks. The biggest challenge is determining which company to lead and who will take charge of management decisions when joint-leadership roles are needed.
