Developing the Business Plan as the Initial Phase of the Merger and Acquisition Process

Publisher Summary This chapter sheds light on planning-based approach to mergers and acquisitions, comprising an integrated process of ten interrelated phases. It focuses on the initial phase—building the business plan—and on tools commonly used to evaluate, display, and communicate information to key constituencies both inside and outside the corporation. Many companies view mergers and acquisitions (M&As) as a business growth strategy in and of themselves. Here, in accord with the view of successful acquirers M&As are considered a means of implementing a business strategy. Although firms may accelerate overall growth in the short run rough acquisition, the higher growth rate often is not sustainable without a business plan—which also serves as a roadmap for identifying additional acquisitions to fuel future growth. Moreover, the business plan facilitates the integration of the acquired firms and the realization of synergy. The chapter also describes the planning concepts and recommends certain strategies based on the results generated by applying specific tools and answering checklists of relevant questions. Business plans must be updated frequently to account for changes in the firm's operating environment and its competitive position within that environment. The chapter concludes by highlighting that business planning is not an event, but an evolving process.