The world of mergers and acquisitions is vast and might seems quite opaque to the non-connoisseur. Fortunately, amontis explains you some key terms to shine some light on this complicated topic.
This article has been first published in our initiative*magazine #14: „Mergers, Acquisitions and Carve-outs: Reshaping for success“ (free download).
DR. ROLAND DUMONT DU VOITEL
Table of Contents
The term “merger” is used for situations, in which two companies of
similar sizes join forces as one firm under one corporate name (e.g.
Daimler-Benz and Chrysler became “Daimler Chrysler”). Depending
on the relationship of the former separate entities to each other,
mergers may be horizontal (direct competitor merger), vertical
(supplier-customer merger), congeneric (serving the same customer),
market-extending, product-extending, or conglomerating (without
common business areas).
The term “acquisition” refers to situations, in which one
company takes over the majority of stakes of another firm.
The acquired firm has then a new owner but doesn’t change
its name or corporate structure. Types of acquisitions include
simple acquisitions, tender offers (direct offers from one firm
to another for outstanding stock), acquisition of assets or
management acquisitions (management-led buyout, MBO –
purchase by a company’s executive).
In a “carve-out”, a parent company sells shares of a subsidiary
or business unit effectively separating it from the parent firm
and creating a stand-alone business. In general, the former
parent company, however, still keeps a controlling interest in
the carved-out unit.
A “spin-off” is a type of divestiture, in which a company
creates a new firm by selling parts of its existing business.
This new business has its own management structure
and is independent of the former parent company.
Pre-Merger / Pre-Acquisition
“Pre-Merger” or “Pre-Acquisition” describes the
preparation phase for a merger or an acquisition.
It includes formulating an M&A strategy, target
setting, evaluating and creating a business case for
The “deal” is the phase following the “pre-” phase, in which the
agreement between the two combining companies is made.
Activities include creating a “100 days plan”, negotiating the
details of the deal, creating a roadmap for the integration,
performing the “due diligence” and finally closing the deal.
Post-Merger / Post-Acquisition
“Post-Merger” or “Post-Acquisition” refers to the phase once
the deal is legally made and officially announced. This is
when the change becomes effective and the integration or
separation process takes place. Planning the Post Merger
Integration is known as the most challenging area to address
before the deal.
A “consolidation” is similar to a merger but
the two entities create a new company that
maintains the core business of the former
firms but under new corporate structures.
How can we help for your M&A activities?
amontis has many years of experience of helping companies to successfuly close merger and acquisitons deals and to harmonise differen corporate cultures.
Learn more here: www.amontis.com/mergers-and-acquisitions
We also design special trainings to give you the best knowledge and tools to carry on successfuly with your M&A, Carve-out or Post-Merger-Integration activities:
If you need further consultancy, just get in touch with us – our first conversation is free of charge.
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About the authors
Roland Dumont du Voitel
Roland Dumont du Voitel looks back on many years of experience in consulting and managing corporations through tough times of turnarounds as well as coaching senior managers to find their way in times of changes, mergers and acquisitions.