The document outlines the 8 key steps in a merger process: 1. Planning for the merger including identifying benefits and potential issues. 2. Searching for a target company through internal or external means. 3. Approaching the target company and convincing them of potential benefits. 4. Valuing the target company based on assets, cash flows, costs, and tax benefits. 5. Obtaining shareholder resolution and approval despite potential opposition. 6. Negotiating the deal terms including valuation of both companies. 7. Conducting due diligence on commercial, operational, financial, legal, and HR aspects. 8. Finalizing the payment or settlement structure, which can include equity swaps

1. Merger Process
Dr Raju Indukoori

2. Process of Merger
1. Plan for Merger
2. Target or Acquisition search
3. Approaching the target
4. Valuation
5. Negotiation
6. Approval or Share holders resolution
7. Due diligence
8. Payment / Settlement
Dr Raju Indukoori

3. 1. Planning
1. Need for Merger
2. Expected benefits
3. Problems foreseen in the process of merger
1. Share holders
2. Creditors
3. Customers
4. Employees
4. Detailed plan
Dr Raju Indukoori

4. 2.Target search
1. Internal Search Vs External Search
2. Horizontal Vs Vertical
3. Domestic Vs Offshore
4. Value Vs Compulsion
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5. 3.Approaching the Target
1. Expressing the desire to acquire
2. Making the target firm to express the desire
to be acquired
3. Showcasing the brand image, market share,
managerial efficiencies, potential future and
stock price
Dr Raju Indukoori

6. 4.Valuation
1. Under valued / Intrinsic Value / Over value /
market value
2. Assets, Future Cash flows , Cost of Capital,
Capital Structure, Tax benefits,
3. Future business after merger
Dr Raju Indukoori

7. 5.Share Holders Resolution
1. BOD calling for extraordinary meeting
2. Opposition from
1. stake holders
2. Regulators
3. Legal framework
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8. 6.Negotiation
1. Over state firms values and understate target
firms potential
2. Simulating fears if not acquired or merged
3. Potential problems that target firm would
face in the absence of M&A
Dr Raju Indukoori

9. 7.Due Diligence
1. Commercial: Product, Customers, Competition, Market share, R&D, Copy rights /
Patents
2. Operational: Process, systems, technology, sub contract, outsourcing, distribution
channels,
3. Financial: coc, cs, financial leverage, ST and LT liabilities, accounting and audit.
4. Legal: litigations, conflicts and pending cases with SEBI, RBI, ROC and other
regulators.
5. HR / IR: Competency, skills, employee relations, compensation,
6. Information Systems: Complexity, compatibility, cost, up gradation
7. Organization: structure, delegation of authority, role of founders, leadership,
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10. 8.Payment / Settlement
This is the last stage of the merger process to
transfer the value of one to another. It can be in
the form of
1) Equity: Swap , issue of new shares
2) Non Equity: Cash, LBO
Dr Raju Indukoori

11. M&A and IB
• Help arrange mergers.
• Help target companies for defense.
• Help value target companies.
• Help in finance mergers.
• Invest in stock of potential targets.
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12. Factors crucial for success of a merger
• Right choice of the target
• Price Determination
• Mode of payment
• Valuation
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13. Any Questions….
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14. Thank You
14Dr Raju Indukoori