The acquisition process is a process of acquiring another company, business or a firm that have a related business and can prove beneficial for the acquirer. The process of acquisition must be done with an extra care instead of randomly selecting any business entity having unrelated business activities. Active acquirers maintain a complete database of companies having related business and then try to acquire the one that will prove most beneficial. Acquirer may design a complete matrix containing various parameters to find out which company is beneficial for acquiring. This matrix may contain parameters such as cash flow, assets, liabilities, revenue, degree of profitability, human resource and many other factors like this.
The acquirer can acquire data of different companies from a number of different sources such as they can use financial statements, public files of the company, and personal contacts within the company, third party ratings and patent analysis of the target company.
There are a number of different steps involve in actual acquisition process. These steps can be categorized as under:-
- The initial contact with Target Company
- The non-disclosure agreement with Target Company
- The letter of Intent among the both parties
- The Due diligence request from acquirer to the target
- Final Negotiations before acquisition
The initial contact with the target company can be done with a number of various means such as discrete contact, a contact by any other third party, or contacting the target by entering into a joint venture contract.