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An M & A Primer
The following information is useful for general management to outline some
of their tasks during a pre-acquisition review. However certain accounting and due diligence
functions not specifically outlined here should be performed by experienced M & A
professionals such as your accountant and attorney. Langworthy Company can assist in
coordinating and performing many of the tasks outlined below as part of both
pre-acquisition review and formal due diligence in conjunction with a client's accounting
and law firm.
Searching For and Screening Acquisition Candidates
 | Corporate objectives as the basis for acquisition strategy and Criteria. |
| Identifying acquisition candidates. |
| Screening potential acquisition targets
| Financial benchmarks |
| Identification of risk |
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Reviewing An Acquisition Candidate's Industry and
Business
A. Industry conditions and competition
B. Business and organization of the potential acquisition candidate
| Organization and personnel |
| Corporate records and administration |
| Assets and facilities |
| Assessing internal controls |
| Products and inventory |
| Technology and research and development |
C. Assessing strengths & weaknesses of the management team and HR
D. Assessing current marketing function effectiveness
E. Assessing pensions, benefits and company policies.
Analyzing an acquisition candidates financial
statements
| General |
| Statement of cash flows |
| Financial ratios |
| Signs of financial distress |
| Financial leverage |
| Forecast and projected financial information |
Reviewing proposed acquisition structures, terms,
agreements
| Review acquisition agreements |
| Financial covenants |
| Accounting of the transaction |
| Implications of tax and generally accepted accounting principles |
Using accountants, attorneys and other consultants
in the pre-acquisition process
CRITICAL: Acquisition
Employee Acceptance of Change & Transition
Unnecessary turnover and defection of employees
critical to an acquisition often occurs because buyers neglect the importance of
providing professional counseling to help them accept transition and change and
to minimize fear and insecurity. Langworthy Company can be an adjunct
facilitator on your management team providing counseling and training to help
employees accept transition and change minimizing turnover and lost
productivity.
To view a sample of the professional human
resource instruments we use to facilitate
Transition and Change, CLICK
HERE.
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