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December 4, 2023

The Intricacies of M&A from Start to Finish

For first-time acquirers, M&A can be challenging, as it comes with strenuous processes with many complexities that can turn the dream into a nightmare. However, with proper guidance, acquirers can have a smooth transaction and an amicable negotiation. To help us navigate our first deal, Rajive Dhar, VP and Head of Corporate Development at NetApp, discusses the intricacies of M&A from start to finish. 

“The cornerstone of all successful acquisitions is having a clear strategy and a plan for executing it. You must ensure that as you're building your organic plans, and blend them with M&A.” - Rajive Dhar

Importance of Strategy

M&A activity must be fundamentally aligned with the company's overall strategic goals and objectives. In most cases, a single transaction may not be sufficient. Therefore, there needs to be a clear vision and path to the desired end state. 

It is also important to recognize that acquiring a new entity will result in new competitors. This requires careful consideration and there needs to be a clear strategy in place on how to deal with them. 

Lastly, A lot of M&A fails if there isn't a clear path for integration. There should be plans in place for leadership post-close, employee retention, and level of integration. 

Target Screening

The first thing to do is have a good understanding of the target market and its competitive landscape. Then assess how much information is publicly available for each company and determine which would be willing to engage in a discussion. Be clear and direct with the target companies of the outreach agenda.

Be careful when approaching a competitor. There are laws and regulations that prohibit certain conversations with competitors. Be forward, but not too forward.

Initial Due Diligence

While there are various things to watch out for, always look for consistency in the narrative. If the narrative changes from one conversation to another, consider that as a massive red flag. The goal during initial due diligence is to understand the unique value the company brings and figure out its culture - How is it run, what the people are like, and if it can function in a larger company setup.

There is not a single meeting that can provide all this information. It's a series of meetings and discussions with various individuals, especially if it's a private, smaller company. There is also information available from public sources that could be helpful during this phase. 


“It's good to negotiate, but at the end of the day, if you want the people to run that particular business, you have to be fair to them.” - Rajive Dhar

When negotiating, push for exclusivity. It’s in any buyer’s interest to perform proper due diligence without racing against another competing buyer. In terms of price, any offer made must be transparent and justifiable, as the selling party will also conduct their research and might demand more. Approach the acquisition as a partnership, and avoid exploiting the seller. 

Also, be transparent about the post-acquisition plans. The worst thing a buyer can do is to surprise the acquired company with changes they didn’t know coming. This might result in employee attrition, resulting in value leaks. 


Earnouts are one of the most common ways buyers and sellers bridge valuation gaps. When structuring an earn-out in a business acquisition, it's essential to be clear about the conditions for payment, whether they're based on profit, revenue, or other metrics. 

Earn-outs based on profit can be complicated, as additional costs like hiring more staff can lead to disputes. The ideal earn-out structure should be straightforward and easily measurable, avoiding complexities and potential disputes. 

For example, paying based on the number of migrated customers can be effective, but issues may arise if those customers generate less revenue than expected. It's important to consider how operational expenses will affect earnings and the potential for litigation if expenses are not managed as expected. 

The goal is to structure the earn-out to maximize returns, ensuring it's more beneficial than maintaining ownership of the company.

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