M&A deals are not only time-consuming, but they are way more than being "complex." The process itself is further divided into different steps, and every step has its own complexities.

For instance, the biggest problem in M&A deals is document or data management. Second, the due diligence process is not less than being stuck in a desert - it's very frustrating and exhausting.

The question is, how can you, as a part of the acquiring company, make things easier and more organized? Well, the first thing you can do is systematize all the relevant documents, be prepared about the questions you want to ask at different stages of the deal, and maybe get help from a trusted virtual data room provider? We will discuss that later in this guide.

M&A deals often take longer than they should because both sides are not fully prepared. That is why we are going to share some valuable tips on how to close M&A deals quickly and successfully.

How to close M&A deals successfully: 9 steps

1. Make an acquisition strategy

First of all, the buyer or acquirer needs to determine what they are trying to achieve with this acquisition. For example, the reasons for acquisitions can be:

● Eliminating competition

● Exploring new markets

● Organizational growth

● Cost reduction through synergies

2. Create a list of targets

Once you are done determining what your acquisition motives are, the next step in the process is deal sourcing and origination. At this stage, it is important to understand that no entrepreneur or business owner is readily willing to sell an established/operating business.

So how can you start your research to find your "ideal" business for acquisition? Well, it is highly likely that you may already have some ideas under consideration. Moreover, you can extend your research to LinkedIn and industry association lists. In fact, many virtual data room services also assist their clients in finding potential sellers.

3. Refine your target criteria and scrutinize potential targets

After getting the lists for potential targets, the next stage is to set criteria for them. The best approach at this stage for corporate development teams would be to categorize the targets in "A" and "C" category deals. The companies falling in the "A" category are basically strong potential targets and ideal strategic fit and size.

The idea behind this categorization is to avoid overpaid acquisitions or being too aggressive. It is also important to safely store all this data, preferably in a data room M&A, in an organized form where it can be shared easily and whenever needed.

4. Approach the potential targets

After making the list of potential acquisition targets, it is time for the corporate development teams to make initial contact with the companies directly. The biggest challenge at this stage is finding the right person to talk to.

One good way to approach the concerned persons is through LinkedIn. In particular, you can reach out to:

● Board members

● CEOs

● Corporate development heads

● Head of the strategy

It is essential to be subtle at this phase rather than being blunt. Be honest and creative with your approach because bluntly asking for an acquisition is most likely to receive an unwanted response.

5. Evaluate the potential targets

When the acquirer connects with the potential seller, it is vital to collect information about the seller as much as possible. The buyer should pay more attention to KPIs, the company's revenues, and current financial statements.

If this data is not readily available, the acquirer can send an initial data request to the seller. This information will help the buyer analyze if it is a good acquisition both strategically and financially.

6. Make your offer and negotiate purchase price

The acquirer can get the upper hand in the negotiation process if fully prepared. The best practice to make your initial offer would be to write an LOI (letter of intent). Remember, LOI is a non-binding document that can be easily altered and changed during the negotiation process.

7. Conduct due diligence

After the acceptance of the offer from the acquirer, the next stage is a thorough examination of the seller. The buyer must examine the assets, legal matters, operations, and other aspects of the company. This process is also known as due diligence.

The due diligence process is utterly exhausting, and that is why it is better to get help from a secure dataroom. The traditional data room providers only offer data storage options, so try searching for an advanced one. A modern online data room software not only helps you with data storage but also improves deal transparency and workflow.

Pro-tip. Always search and compare the best data rooms for M&A, specifically because these virtual data rooms are particularly developed to facilitate M&A deals.

8. Finalize sale or purchase contract

After the due diligence process, minor modifications in the SPA (share purchase contract) are highly expected. As a buyer, you don't want to make bigger changes in the LOI (letter of intent) because it is considered bad faith. The SPA is a binding agreement where the buyer must make a deposit to show good faith.

9. Deal closure

Now that all the parties involved have signed SPA, the deal is finally closed (unless there are last-minute hiccups). Once the intermediary (mostly an attorney) is satisfied that both parties have done their parts, he/she will transfer the share certificates to the buyer through a registered post.

Wrap up

Although mergers and acquisitions are time-taking and exhausting transactions, doing things step by step can save the corporate development teams from a lot of trouble. Most importantly, automating the workflow through virtual data rooms can make things a lot easier for the buyer as well as the seller.