{"id":7036,"date":"2019-11-08T08:45:05","date_gmt":"2019-11-08T03:15:05","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=7036"},"modified":"2020-04-14T16:39:07","modified_gmt":"2020-04-14T11:09:07","slug":"what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions\/","title":{"rendered":"What are the Things to Consider While Planning Mergers and Acquisitions in Financial Institutions?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The mergers and acquisitions\n(M&amp;A) is a multi-staged process that involves several steps and often gets\ncompleted within a period of 6 months to many years. It acts as a boon for\ncompanies that are struggling to expand the business and generating less\nrevenue. Generally, Entrepreneurs finds it challenging to sustain in a\nfinancial constraint environment. Thereby, corporate professionals seek growth\nopportunity platforms to strengthen their company\u2019s financial performance and\nmarket stature. <\/p>\n\n\n\n<p>To gain a reputation in the corporate world, one needs to create growth strategies of diversifying service lines or entering into joint ventures via merger and acquisition. If you are running a financial institution\u00a0or aspire to prosper in the banking realm, then you must be well-versed with the entire process of M&amp;A. Needless to worry, this blog will provide a step by step guide to planning <strong><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\">merger and acquisition<\/a><\/strong>. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2a006428e84\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2a006428e84\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions\/#What_are_Mergers_and_Acquisitions\" title=\"What are Mergers and Acquisitions? \">What are Mergers and Acquisitions? <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions\/#A_Comprehensive_Guide_to_Merger_and_Acquisition\" title=\"A Comprehensive Guide to Merger and\nAcquisition \">A Comprehensive Guide to Merger and\nAcquisition <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions\/#Things_to_Keep_in_mind_while_planning_Merger_and_Acquisition\" title=\"Things to Keep in mind while planning Merger and Acquisition\">Things to Keep in mind while planning Merger and Acquisition<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions\/#Conclusion\" title=\"Conclusion \">Conclusion <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Mergers_and_Acquisitions\"><\/span>What are Mergers and Acquisitions? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As the terms suggest, the merger and acquisition refer to the consolidation of assets or companies through several types of financial transactions, like tender offers, mergers, acquisitions, purchase of assets and management acquisitions. The term M&amp;A also means the desks at&nbsp;financial<br>institutions&nbsp;which deal in such activities. Often these terms of merger and acquisition get misinterpreted as one; however, they differ extensively in implications. <\/p>\n\n\n\n<p><strong>Merger<\/strong> -When two companies unite together to form a single entity; it is known as a merger. It is an agreement that combines two existing companies into a new company. <\/p>\n\n\n\n<p><strong>Acquisition &#8211; <\/strong>An acquisition takes place when one company buys another company, and the buyer company integrates the other entity with itself. <\/p>\n\n\n\n<p>Jointly the mergers and acquisitions&nbsp;help to expand a company\u2019s business and gain&nbsp;more shares in the market. &nbsp;Financial institutions who faces severe competition to increase&nbsp;their shareholder value in the market seize to the process of merger and acquisition.&nbsp;<\/p>\n\n\n\n<div class=\"browse\">\n<p>Browse through our articles on services provided at <a href=\"https:\/\/swaritadvisors.com\">Swarit Advisors<\/a>, and just let us know if we can help you with your IPO or Comapny Takeover or SEBI Advisory Services.<\/p>\n<div class=\"browse1\">\n<table class=\"table1\">\n\n<tbody>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\"><span>Mergers and Acquisitions<\/a>&nbsp;<\/span><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/buyback-of-shares\"><span>Buyback of Shares<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/merger-and-amalgamation\"><span>Merger and Amalgamation<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/public-issues\"><span>Public Issues<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/rights-issue\"><span>Rights Issue<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/preferential-allotment\"><span>Preferential Allotment<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/company-takeover\"><span>Company Takeover<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/issue-of-debentures\"><span>Issue of Debentures<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/insurance-broker-license\"><span>Insurance Broker License<\/span><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/table>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Comprehensive_Guide_to_Merger_and_Acquisition\"><\/span>A Comprehensive Guide to Merger and\nAcquisition <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are the steps to follow while planning the merger and acquisition of a financial institution: <\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"622\" height=\"498\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2019\/11\/Guide-to-Merger-and-Acquisition.png\" alt=\"Guide to Merger and Acquisition \" class=\"wp-image-7060\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2019\/11\/Guide-to-Merger-and-Acquisition.png 622w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2019\/11\/Guide-to-Merger-and-Acquisition-300x240.png 300w\" sizes=\"(max-width: 622px) 100vw, 622px\" \/><\/figure>\n\n\n\n<p><strong>Brainstorm and\nform an acquisition strategy<\/strong>&#8211;\nOne needs to set a master plan before positioning the course of action in\nmerger &amp; acquisition process. A brilliant acquisition strategy comprises of\nthe acquirer having a clear idea of what he expects to gain by acquiring\nanother organisation. Also, he must exactly know about the purpose of the\nacquisition.<\/p>\n\n\n\n<p><strong>Identify the potential markets- &nbsp;<\/strong>Build\nM&amp;A search criteria to determine the potential target companies.\nShortlist those companies which have higher profit margins, premium geographic\nlocation, and more customer base. <\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/\" target=\"_blank\" rel=\"noopener noreferrer\">Different Types of Mergers and Acquisitions<\/a><\/mark>.<\/p><\/div>\n\n\n\n<p><strong>Select the best company for acquisition<\/strong>&#8211; &nbsp;After identifying potential target companies, the acquirer contacts the concerned companies and choose the one which fits well to its search criteria. It\u2019s essential to gather the target company\u2019s information and check whether it is amenable to merger and acquisition or not. <\/p>\n\n\n\n<p><strong>Take valuation analysis<\/strong>&#8211; Don\u2019t seal the deal before\nyou are sure. Ask for substantial information of the target company like\ncurrent financials and analyse its suitability for an acquisition target.<\/p>\n\n\n\n<p><strong>Negotiations<\/strong>&#8211; After procuring sufficient information about\nthe target company, the acquirer has to create a reasonable offer. Once the acquirer\npresents the initial offer to the target company, then both the parties can\nnegotiate terms. <\/p>\n\n\n\n<p><strong>Due diligence<\/strong>&nbsp;\u2013 <a href=\"https:\/\/en.wikipedia.org\/wiki\/Due_diligence\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">Due diligence<\/a> is a complex process which takes place after both parties confirm on negotiation terms. &nbsp;It aims to rectify the acquirer\u2019s assessment of the target company\u2019s evaluation. Due diligence implies conducting a detailed examination of every aspect of the target company\u2019s operations such as an analysis of its human resources, financial metrics, customers, assets and liabilities, etc.<\/p>\n\n\n\n<p><strong>Finalize an agreement of purchase and sale<\/strong>&nbsp;\u2013 Once the due diligence is complete successfully with no major problems arising, the next step is to execute a final contract for sale. Both acquirer and the target company then make a final settlement on the type of purchase agreement they want between asset purchase or share purchase. <\/p>\n\n\n\n<p><strong>Closing of the acquisition<\/strong>&nbsp;-Lastly, the acquisition deal get closed, and the management teams of the acquirer and acquired work together on the process of merging the two companies. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Things_to_Keep_in_mind_while_planning_Merger_and_Acquisition\"><\/span>Things to Keep in mind while planning Merger and Acquisition<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before you plan to initiate the merger and acquisition process for your financial entity, you need to consider a few things in mind that are listed below:<\/p>\n\n\n\n<ul><li><strong>Strengthen your business relationship<\/strong>&#8211; The most successful acquisitions are a result of a personal understanding amidst the acquirer and acquiring company. Before doing the paperwork, you should strengthen your bond as it can simplify due diligence and makes negotiations easier. <\/li><\/ul>\n\n\n\n<ul><li><strong>Decide on hiring an investment banker<\/strong>&#8211; Contemplate on the decision of hiring an investment banker.&nbsp; Your choice may depend on the analytical skills of your financial team.&nbsp; Generally, bankers with a direct pipeline in target entities can be an asset for your company. <\/li><\/ul>\n\n\n\n<ul><li><strong>Define roles and duties<\/strong>&#8211; It is utmost essential to distribute the roles and responsibilities among the old employees as well as the new ones. Since there will be an increase in the workforce, so things may get messy if you don\u2019t define the roles from the start. The best way to distribute the duties is by identifying the weaker departments and filling them with competent employees. <\/li><\/ul>\n\n\n\n<ul><li><strong>Find the Perfect Match<\/strong>&#8211; You can\u2019t afford to skip any aspect when your company\u2019s reputation is at stake. Before becoming one with the target company, you must study its work ethics and culture. The company\u2019s culture plays a significant part in the success and failure of merger &amp;acquisition process. In case the acquires company\u2019s culture is poles apart from the acquired company then it may cause confusion and mismanagement. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><div class=\"shadow4\">The merger and acquisition is a strategic tool used to\nobtain tremendous growth in the short run. If you wish to underpin your\nbusiness with an extensive consumer base, look no further than merger and\nacquisition. The legal procedure of M&amp;A procedure is quite difficult to\ngrasp; therefore, you must seek the help of our professionals. <\/div><\/p>\n\n\n\n<div class=\"read\"><p><b>Read, Also:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/due-diligence-process-for-merger-and-acquisition\/\" target=\"_blank\" rel=\"noopener noreferrer\">Due Diligence Process for Merger and Acquisition<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The mergers and acquisitions (M&amp;A) is a multi-staged process that involves several steps and often gets completed within a period of 6 months to many years. It acts as a boon for companies that are struggling to expand the business and generating less revenue. Generally, Entrepreneurs finds it challenging to sustain in a financial constraint [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":7057,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[120],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/7036"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=7036"}],"version-history":[{"count":10,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/7036\/revisions"}],"predecessor-version":[{"id":10032,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/7036\/revisions\/10032"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/7057"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=7036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=7036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=7036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}