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Expert Guide: The M&A process for buyers and sellers

M&A Process Guide Step-by-Step
Get this guide to learn how to approach and carry out a successful M&A process in 2024

This post was originally published in February 2019 and has been updated for relevancy on April 17, 2024.

Buying or selling a company is not as simple as signing a piece of paper. There are a lot of things that go on behind the scenes that very few people are aware of. If you are new to mergers and acquisitions (M&A), this article is for you. This guide regroups everything you need to know about the M&A process, whether you are on the buy-side or the sell-side of the deal.

What is Mergers Acquisitions M&A Process?

The M&A process, which stands for "Mergers and Acquisitions," is a complex and multi-step procedure businesses undergo to merge with or acquire other companies. This includes formulating the strategy, due diligence, and integration, which we will discuss thoroughly in this article.

M&A Process Overview

An M&A transaction touches almost every facet of an organization. In this section, we will discuss the people involved, the deal timeline, and the challenges that come with it. 

Roles and Responsibilities

Before a company can execute M&A, it will involve a handful of people, from the executives to the rank and file. Here are some of the most critical roles and responsibilities in a typical deal.

The Board of Directors: In a public company, the board has the final say on whether or not to proceed with the acquisition or the sale of the company. They are also in charge of setting the company’s overall strategy.

CEO: In a private company, the CEO signs off on deals and sets the overall strategy. However, in a public company, the CEO is in charge of implementing the strategy and ensuring alignment with the corporate development team. 

CFO: The CFO evaluates the potential deal's financial risks and rewards. Sometimes, the corporate development team reports directly to the CFO for deal approval. 

Head of Corporate Development: The head of corporate development is responsible for growing the company through inorganic growth. They identify, evaluate, initiate M&A opportunities, and oversee the entire M&A process.

External Consultant: Due to the overwhelming work M&A requires, smaller companies often involve a third-party consultant to help with the due diligence and valuation processes. In some instances, they are also used to remove biases to judge the numbers objectively. 

Investment Bankers: In M&A, investment bankers act as agents who broker deals. They can represent either the buyer or the seller and use their wide connections to initiate auction processes. 

Legal team: No one can execute M&A without lawyers. They are responsible for drafting contracts and agreements that are essential to ensuring that the deal meets all legal parameters. The legal team is also responsible for legal due diligence.

Integration team: The integration team is in charge of integrating the acquired business into the parent company. In larger corporations, they have a dedicated integration team, but for smaller companies, this responsibility will fall under functional leaders.


DealRoom is an advocate of Agile M&A, so the M&A process timeline that we put forward is somewhat different to that suggested elsewhere.

The following graph summarizes our thinking on how this timeline should play out:

M&A Process Timeline traditional vs Agile

In any M&A process, getting the timelines right is crucial. Like a meal that combines different ingredients, what happens when, is crucial to the relative success of the end result.

Larger deals may not necessarily mean more time - just more resources (i.e., bigger deal teams).

Generally, this entire process should take up to 6 months, but take every opportunity to learn from previous workflows and make the next workflows more efficient.

Sell-Side M&A Process Steps

  1. Establish a motive for sale
  2. Ensure that your company is ‘sale ready’
  3. Create DealRoom for the company materials and due diligence process
  4. Create a long list of potential buyers
  5. Develop a Confidential Information Memorandum (CIM)
  6. Signing the Letter of Intent (LOI)
  7. Be ready for confirmatory due diligence
  8. Negotiate with buyers
  9. Signing and Closing

Sell-side goals and objectives

Selling a business can be difficult, especially when there are emotions involved which can complicate the entire transaction. But despite its difficulty, there are three main reasons why founders sell their business:

  1. Money - Money is a great motivator to sell a business. Whether the founder is having financial problems, or the industry suddenly boomed and tripled the company’s value, money always plays a factor during sell-side M&A.  
  1. Growth - Sometimes, the founder wants to build and expand his business beyond his capabilities. A larger company or investor can provide more resources, networks, or technology that can help the business grow in ways the current owner cannot achieve alone. 
  1. Exit - There are also instances where the founder just doesn’t want to be in the business anymore. Whether it’s retirement, or wanting to pivot to another career, selling the business is a great way to exit, rather than just shutting it down and getting nothing in return. 

Agile sell-side M&A process with Dealroom 

Selling a business while trying to run it is one of the most complicated things an owner can do. Without an agile and efficient M&A process, one of the two will suffer. 

One of the best things about DealRoom M&A Optimization Platform is its virtual data room capabilities. If you’ve been planning to sell your company for months, maybe years, you can organize all your documents and files inside DealRoom. When the time comes to entertain buyers, you can easily add them to DealRoom. Instead of having to navigate across disparate tools, everything can be found within one intuitive platform-DealRoom.

Also, if you have multiple buyers, DealRoom allows you to add multiple users and restrict their access to files through granular permissions capabilities. Collaboration with the buyer is also extremely easy within the platform. 

And the best part is that DealRoom is extremely intuitive, enabling any buyer to jump in and easily navigate across files and documents, with little to no training.  

Here is a detailed overview of the usual M&A process steps on the sell side:

1. Establish a motive for the sale

As a seller, you must understand why you want to sell, as it will help you determine what type of buyer you should look for. 

If you are looking to grow your business, then look for financial buyers, mostly private equity firms. They will need you and your leadership team to keep running the business.

However, if you are looking to retire, then strategic buyers might be the right buyer for you. Typically, their goal is to absorb the business to be a part of something bigger and will not need you as much moving forward. 

Establishing a motive from the beginning will help you maximize your time and sale price. 

2. Ensure that your company is ‘sale ready.’

Being ready to sell your company is not the same as being ‘sale ready’.

Being ‘sale ready’ means ensuring that the balance sheet is in good condition (i.e. not overloaded with debt), a stable and competent management team is in place, contracts are in place with the company’s largest clients, and more.

the current state of M&A

3. Create DealRoom for the company materials and due diligence process.

The more organized you are, the better the sales process is likely to run.

This means utilizing a project management tool like DealRoom (and feel free to use others), rather than the endless back and forth of email and competent but far-from-best-in-class file storage software like Google Drive.

There’s a reason that M&A professionals use DealRoom M&A Optimization Platform, and if you’re organizing a sale of your business, it would be no harm to investigate why.

4. Create a long list of potential buyers

You can always hire a good investment banker that will help you find buyers. However, if you choose to do the sale on your own, then you need to create a list of potential buyers based on your sale rationale. 

Use whatever resources you can- company contacts, LinkedIn, industry association members, private equity firms active in your space, and more - to develop a list of those companies you believe would represent good buyers.

5. Develop a Confidential Information Memorandum (CIM) 

A CIM is typically a 2-page teaser that summarizes the company and its financial results without giving away too much sensitive information. If the teaser raises an interest, then the potential buyer must sign an NDA to get additional information. 

However, if you opt to hire an investment banker to help you with your sale process, then they will most likely do this document for you, along with finding suitable buyers. 

6. Signing the Letter of Intent (LOI)

If you find a serious buyer that wants to pursue the transaction, the next step is to sign a letter of intent. This is a formal, yet non-binding, written document outlining the buyer’s offer for the company, together with the terms and conditions of the deal. By accepting this letter, the seller now officially submits the business into a thorough investigation to be performed by the buyer. 

As a seller, be sure to incorporate a hefty “break-up fee” into the LOI to ensure the buyer is not just kicking tires and fishing for information. If the buyer backs out of the deal, they will have to pay a sum of money.

7. Be ready for confirmatory due diligence  

At this point, the buyer will now turn every stone in the company, looking for reasons not to do the deal. This can be stressful for sellers, as they need to continue running the business while accommodating possibly 500 questions from 50 different people. 

Having a project management software like DealRoom will come in handy, as it will promote collaboration, efficiency and agility throughout the process.  

8. Negotiate with buyers

After looking at everything in the company, the buyer will surely adjust pricing based on whatever they found or did not find. And it’s not just the price. Some buyers will negotiate for reps and warranties, and others will negotiate for leadership retention. This is where negotiation comes in. 

It’s also another point of this value chain where investment bankers earn their pay. Having typically worked on the negotiations of dozens of deals, they should know how to extract higher sale values from buyers who understate their interest in the business.

9. Signing and Closing

When both parties are happy with the deal structure, it’s time to sign the dotted line and close the deal. As a seller, it is crucial to understand that signing is not the same as closing. There are deals that take months to close, and during this interim period, you still have to run the business until the buyer takes full ownership of the company.

Buy-Side M&A Process

  1. Develop an M&A Strategy
  2. Develop a search criteria
  3. Develop a long list of companies for acquisition
  4. Contact target companies
  5. Preliminary due diligence
  6. Negotiations
  7. Letter of Intent
  8. Confirmatory Due Diligence
  9. Signing and Closing
  10. Integration

Buy-Side Goals and Objectives

For buyers, the primary objective of doing M&A is to accelerate growth and achieve the overall company strategy, which would not be possible without the other company. This could mean gaining access to new markets, and technology, or enjoying economies of scale. It usually boils down to two objectives: Revenue synergies and Cost synergies. 

Here are the common steps of Buy-side M&A:

1. Develop an M&A Strategy

The company decides on its overarching goals for the M&A process. It’s important that there’s a good motive for undertaking M&A as it underpins the whole process.

It also allows you to ask ‘why are we doing this?’ any time doubts creep in (and they almost certainly will).

Additionally, if you have ambitious growth plan for your company endeavors, check out our guide to developing an acquisition strategy.

2. Develop a search criteria

When looking at which transactions to undertake, companies typically consider a number of M&A criteria. These include:

Revenue - Near the top of the criteria will be the size of the company in economic terms.

Geography - Would an acquisition give more market share in an existing geography or access to a new geography?

Industry - Is the acquisition target operating in the buyer’s industry or a complementary industry? How much crossover exists between the two industries?

Market - Assuming both companies are in the same industry, does the target company operate in a faster-growing segment than that of the acquirer?

Intellectual Property - Is there some intangible asset, such as IP, that an acquisition would give the acquirer ownership of?

3. Develop a long list of companies for acquisition

Based on the previous step, you will now be able to develop a long list of companies that fit the search criteria. Some companies should immediately look more attractive than others, and these will form the basis of your shortlist for an acquisition.

4. Contact target companies

There are typically two approaches to contacting target companies - personally or through an intermediary. This step allows you to assess the target company owner’s interest in selling or entering a merger and gain a general understanding of their valuation expectations.

5. Preliminary due diligence

Having gained some insight into a target company and its owner’s willingness to sell or merge, it’s time to sign a non-disclosure agreement (NDA) and gain access to sensitive information that will help you create your initial offer for the company. 

Here are some resources you can learn about the best methods how to a value a company or key considerations in valuation.

6. Negotiations

The negotiation step is crucial for the buyer and seller. Not only does it lay the groundwork for an eventual deal, but it also allows each side to gain an understanding of the other and their willingness to compromise and to make a deal happen.

Most deals that don’t make it fall through at the negotiations step.

7. Letter of Intent

The next step is writing a letter of intent (LOI) to ensure that the seller is no longer entertaining any other buyers during this time. This gives buyers peace of mind, and a comfortable period where they can fully investigate the target company. 

8. Confirmatory Due Diligence

This is a crucial part of the acquisition process. The confirmatory due diligence is an audit or investigation of the target company, its operations, human capital, tax and legal structure, and its financials.

The goal is to confirm all the assumptions made by the deal team regarding the target company and answer the most important question - Are we really buying this company? 

A high-quality virtual data room such as DealRoom will make the process significantly more productive

💡 Book a demo with our sales team to find out more

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In addition, you can view what a typical M&A due diligence looks like or get a free due diligence checklist sample here.

Useful resource:

9. Signing and Closing

The buyer uses all of the information gained during due diligence to put an informed purchase contract with the target company.

This phase may involve an intermediary - agreed upon by both parties to the deal - to look after escrow accounts and deeds to the target company.

It is important to note that signing the deal does not signify the end of the transaction. It is very rare for signing and closing to happen simultaneously, especially for public company deals. As a buyer, you need to obtain third-party and regulatory approvals, if any, before you can close the deal and transfer ownership. 

10. Integration

Integration is the process that happens after closing the deal. The buyer is now officially the owner of the acquired business and can start implementing a change management strategy to generate significant value for the company. 

Ideally, the integration plan is already fully developed before reaching this stage of the deal. If you want to learn more about early integration planning, read here:


Few projects present the conundrum that M&A presents organizations: By its nature, the more details it addresses, the more value it adds.

But on the other side of this equation, the process needs to be agile, and all things being equal, the more efficient the process, the more value it adds. How can companies add more detail to their M&A whilst reducing the team to close transactions? In a word, technology.

DealRoom’s due diligence product also has project management capabilities designed to address the M&A detail-time conundrum. It should be considered a critical element of the process by any company undertaking agile M&A.

Get your M&A process in order. Use DealRoom as a single source of truth and align your team.

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