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  • Writer's pictureFulcrum Wealth Advisors

Understanding Mergers and Acquisition Planning

Picture of two people shaking hands.

Mergers and acquisitions are business consolidations that essentially indicate the growth process of a company. Mergers are the coming together of two companies to form one, whereas acquisitions are the buyout of one company by another. They’re both, however, significant aspects of the business investment industry. Read on to learn the 5 steps of merger and acquisition planning.

How Do Mergers and Acquisitions Happen?

Mergers and acquisitions can happen in the following ways:

  • Buy out of Assets

  • Purchase of Equity Share

  • Exchange of Shares against Assets

  • Share for Share Transactions

Why Do Mergers and Acquisitions Happen?

Some of the main reasons businesses engage in mergers and acquisitions include:

  • Economic collaboration for saving capital costs.

  • Increasing the firm's productivity and boosting its growth prospects.

  • To achieve an economy of scale.

  • Product or market capability expansion.

  • To create competitive advantages and placements to gain access to a larger market.

  • Convergence of strategic planning and cutting-edge technology.

  • To lower tax liability.

  • The company is undervalued.

  • Risk diversification.

The 5 Steps of Merger and Acquisition Planning

An aerial view of four people connecting two puzzle pieces.

1. Pre-Merger and Acquisition Review

This step requires the acquirer to self-evaluate the need for mergers and acquisitions, determine the costs, and map out the targeted growth strategy.

Business Strategy

An important requirement of effective mergers and acquisitions is a well-defined plan that outlines the strategy the business will use. This strategy needs to define the roles of mergers in the longer terms plan of the business and how it is supposed to align with future goals.

Policy and Procedures

Mergers and acquisitions are vast, and with each step, various tasks need to be performed. A definite plan categorically defines the roles, responsibilities, and powers that will be assigned to the people involved in the process, and this should be clearly stated in the policy. Additionally, the business also needs to outline step-by-step the new procedure that they plan to incorporate.


As a general rule, when planning for mergers and acquisitions, businesses should assess the “as is” scenario of the business. The main question that needs to be addressed here is how ready the company is for the desired merger and acquisition.

Chronology of Events

After defining the strategy and assessment of the business' compatibility with the desired merger and acquisition, the next step for the planning committee is to determine the chronology of events that the business will follow during the said mergers. Here, various deadlines and expectations need to be defined in terms of specific timelines. The timeline may help in managing the whole process more efficiently.

2. Search and Screen the Targets

This step entails looking for potential, suitable merger and acquisition targets. This process aims primarily to look for a strategical match-up for the acquirer.

With the plans and chronological order in place, this step requires the planners to identify the most suited candidates for the merger and acquisition. This step should align with the previous stages as the involved personnel should be able to assess and formulate models that are in line with the targets stated earlier. Additionally, the ideal candidates should have a thorough understanding of how mergers and acquisitions work.

3. Investigation and Assessment

After the suitable enterprise has been identified through basic evaluation, a thorough study of the target company must be performed. This includes:

Preparation of Risk Metrics

With the plan and people in place, the next step is clearly defining the risks associated with the desired merger and acquisition. Even though various calculations of the risk associated may have been conducted before the "merger and acquisition" decision was made, it is advisable to reassess the risks with the target company in mind. This allows you to set perceivable and tangible expectations.

Examination and Inspection

The examination and inspection step requires the involved personnel to perform due diligence and examine the documents associated with the process. This way any shortcomings or variations can be identified early on, and if a reiteration is needed, the same can be planned.

4. Analysis and Acquisition

After the business unit has been recognized, the next step is to begin discussions to reach an agreement on a mutually agreeable merger. This causes both companies to reciprocally work in good faith and amicably cooperate with each other during the entire process.


After the strategic risk assessment and the required due diligence is met, the experts need to align the business objectives and attempt to forecast the expected business and cash flow from the merger and acquisitions.

No matter the type and size of the business, the viability of the business process remains with the determination of the outcomes of the business activities. Here, the expert needs to define the expected results of the business for at least the next five years.

5. Integration and Post Merger Review


At this phase, both parties should start planning for the proper integration of the merger and acquisition. This has to be done both in terms of the cost associated with the merger and the business process.

An extra cost can impact all the stakeholders of the business, which may result in poor performance of the company employees. Additionally, integration in terms of business process is also vital as the merger and acquisition should result in a process that is properly aligned with business goals.


Even after the merger and acquisition process is complete, there remains an urgent need for proper and timely assessments of the results of the merger. It looks at the impact of the merger and whether it is properly aligned with preset objectives. Assessment timelines may differ from company to company depending on the business processes, conditions, and how the transition took place. But initial assessment should start with the initial six months of operations post-merger.

Accomplishing a merger can be a time-consuming process. With the several steps you need to follow during the whole course of the merger and the challenging timeline requirements, it is vital to find the right partner for expert guidance and a smooth transition.


Fulcrum Wealth Advisors, WA, provides financial planning services that are tailored to the needs of today's businesses. Being a fiduciary entity allows us to work with a strategy that is best suited for mergers and acquisitions. The team in charge of your strategy consists of a group of people who have a combined experience of over a hundred years in various aspects of business planning. From business growth planning and tax laws to retirement planning for yourself and key employees, we provide clarity and confidence in tackling whatever comes your way.


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