Intermediary: Investment Banking
Investment banking work for companies, governments and other entities with the main objective of helping them to create value. They manage for example underwriting of new debt or equity securities, buy and sale of securities, etc. In mergers and acquisitions they facilitate the transaction for both institutions and the private investors.
Main mission: Understand the points of view of both companies and find out the conflict part to try to help them to achieve an agreement.
- Initial contact.
- Main characteristic of the process: confidentiality.
Initial contacting person
It is usual and advisable that the main managers participate in the initial contact: The president, managing Director, chief financial officer (CFO) or production director.
|Target type||Contacting person|
|Small company run by his owner.||The owner or manager|
|Small independent company, not run by his owner.||Stockholder or key partner.|
|Division of a big company.||Executive Director of the division in the main office (also influential member of the board, finance advisor or banker).|
|Small unit of a big company.||Executive Director of the unit in the main office (also operational planning director).|
|Medium or big unlisted company.||Key stockholder influential member of the board, banker or finance advisor.|
|Medium or big listed company.||Executive director, main banker, main legal advisor, board member closer to executive director.|
The cold call has the following main objectives:
- Friendly information about the intentions to the target company.
- Make an appointment with the company executives to discuss the main benefits of mutual collaboration.
The meeting room for the initial meeting should be in the investment banking offices or in a hotel. It is never in public places like hotel’s halls, cafeterias or restaurants.
In the initial meeting, the acquiring company should ask for financial, commercial or tax information and it will sign a confidentiality agreement to obtain it. Acquiring company should also express the benefits of both companies in the merger.
In the subsequence meeting the technical aspects are going to be considered. The Letter of intent (LOI) is written and a final agreement should be obtained.
The main interest acquiring company has in the meetings is obtaining information. Acquiring company look for ideas to ensure the acquisition results, so they should:
- Research target company trajectory and reputation.
- Analyze a day by day tracking of the target company in a big enough period of time.
- Analyze the financial situation of target company.
Realize the required procedures
Executives should let lawyers, bakers and accountings realize the required procedures and this could be dangerous.
The data room is the, usually virtual place where all relevant information of the target company is stored. Only authorized personnel could access this information.
The acquisition process has mainly 3 phases:
En colaboración la Dra. Inés Martín de Santos.