Question

Mark is a senior executive of a Canadian company, Canpure, that manufactures and sells water purification systems. The company is hoping to expand into the Far East and has identified Star Enterprise in Vietnam as a promising first overseas buyer. Mark wants to ensure that he negotiates a workable contract that provides his company with all the protection he needs. Jon is the representative of Star Enterprise, and he knows that he needs expert advice before he embarks on serious negotiations. In this context, Jon meets you and seeks your opinion on major important areas of his interest. As an expert, what major issues will you cover and advise Jon to consider in this negotiation?

Answer 1

As an expert , I would like Jon to consider and evaluate few points before the Merger & Acquisition (M&A) negotiation process:

1) How this negotiation is fitting into your company's vision and mission - Is Canpure in line with what your stategy is going forward.

2) Cost of the transaction and type (Cash vs stock concentration mix)- There are lot of costs involved in acquiring another business, make sure you account all the things. And how the transaction will take place, cash or company stock is an important consideration to any M&A process.

3) Due diligence - Conducting a proper due diligence of the company's assets and liabilities , customers and products well before entering into the negotiation process.

4) Integration plan - Work on an integration plan well in advance ensuring clearly defined short term and mid term objectives to deliver

5) Impact on Financials - Study the impact of the acquisition on your financials. How is it going to affect your revenues and profit margins. The growth rate of the company is also a crucial factor to consider and how it will in turn affect overall valuation of your company.

6) Role of Legislation - In case of international acquisitions and mergers, organisations with a significant market share are often impacted by legislative power.