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Due diligence among the first steps in mergers and acquisitions

The mergers and acquisitions process breaks down into four phases, generally speaking. In a situation where two Wisconsin companies are merging or one company is acquiring another, the parties involved can expect to go through due diligence first, followed by the agreement phase, the integration phase and the value attainment phase.

Due diligence is the phase during which the parties undertake a detailed examination of the company to be acquired or both companies in a merger. Every part of a business should be evaluated as part of due diligence, including human resources, assets and liabilities, intellectual property, finances and technology. It may also be valuable to examine information technology integration across and throughout the companies during due diligence as well.

During the agreement phase of mergers and acquisitions, it's important to develop an understanding of potential efficiencies that may arise as a result of the transaction. It is important to understand the variance in the structures and processes between the companies. Much of this phase is spent planning the transition from two organizations to one.

Integration brings the two companies together with execution of management changes, evaluation of vendors and investment to handle problems that come up. Competition among vendors can be encouraged when one company buys another, often resulting in reduced costs.

In a well-planned merger or acquisition, value is gained by combining the previously separate organizations. During the value attainment phase, the post-transaction company might gain from distribution channels or wider customer bases. A lawyer with experience in business and corporate law may be able to help by negotiating the terms of sale or merger or by drafting the required agreements to fit the client's needs and goals. A lawyer might help during due diligence by examining company records, visiting areas where inventory is stored, or conducting interviews of personnel, customers and suppliers.

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