Walk Me Through an M&A Deal Process: Complete Guide
Understand the full M&A deal process from start to finish. Learn about sell-side vs buy-side, key phases, and common interview questions.
Understanding the M&A process is essential for IB interviews. You need to know what happens at each stage, who's involved, and what the key work products are.
Sell-Side vs. Buy-Side
Role Comparison
| Term | Definition | Note |
|---|---|---|
| Sell-Side Advisor | Represents the company being sold | Runs the process |
| Buy-Side Advisor | Represents potential acquirers | Helps with bidding |
| Sell-Side Work | CIM, process management, negotiations | More predictable |
| Buy-Side Work | Due diligence, valuation, deal structuring | More variable |
Most IB M&A work is sell-side, where you're running a competitive auction process. This guide focuses on sell-side.
Phase 1: Preparation (Weeks 1-4)
Key Activities
- Kick-off meeting with client management
- Due diligence on the target (your client)
- Build financial model and valuation
- Prepare Confidential Information Memorandum (CIM)
- Create teaser (anonymous summary)
- Develop buyer list
Key Documents
Preparation Documents
| Term | Definition | Note |
|---|---|---|
| Teaser | 1-2 page anonymous summary | No company name |
| CIM | 50-100 page detailed info package | Company name revealed |
| Financial Model | Historical and projected financials | Supports valuation |
| Buyer List | Strategic and financial buyers | 50-200 names typically |
Phase 2: Marketing (Weeks 5-8)
Key Activities
- Contact potential buyers
- Send teasers to gauge interest
- Execute NDAs (Non-Disclosure Agreements)
- Distribute CIM to signed NDAs
- Field questions from interested parties
- Set up virtual data room (VDR)
The goal is to generate competitive tension. More interested buyers = better pricing for seller.
In a typical sell-side M&A auction, approximately how many potential buyers receive the CIM, and how many make it to final bids?
Phase 3: First Round Bids (Weeks 9-12)
Key Activities
- Receive initial indications of interest (IOIs)
- IOIs include preliminary value range and structure
- Evaluate bids on price, certainty, and strategic fit
- Select buyers to advance to next round
- Typically narrow from 20+ to 5-8 bidders
What IOIs Typically Include
- Preliminary valuation range
- Form of consideration (cash/stock/mix)
- Financing sources (committed vs. subject to)
- Key due diligence items
- Proposed timeline
During an M&A auction, what is the PRIMARY difference between an IOI and a final bid (LOI)?
Phase 4: Management Presentations (Weeks 13-16)
Key Activities
- Schedule management presentations with selected bidders
- Management team presents to potential buyers
- Q&A sessions on strategy, financials, operations
- Open data room for detailed due diligence
- Facilitate site visits if relevant
This is where buyers really dig in. They're evaluating both the business AND the management team.
Phase 5: Final Bids (Weeks 17-20)
Key Activities
- Receive final (binding) bids
- Final bids include markup of purchase agreement
- Compare bids on price, terms, and certainty
- Negotiate with top bidders
- Select winning bidder
What Final Bids Include
- Firm purchase price
- Definitive financing commitments
- Markup of purchase agreement
- Remaining diligence items (should be minimal)
- Timeline to signing and closing
Phase 6: Signing & Closing (Weeks 21-24+)
Key Activities
- Negotiate and finalize purchase agreement
- Sign definitive agreement
- Announce transaction (if public)
- Satisfy closing conditions (regulatory, financing)
- Close transaction and transfer ownership
A seller has ONE clear strategic acquirer who has approached them directly with a strong offer. What is the BEST advice for the seller?
Full Timeline Summary
M&A Process Timeline
| Term | Definition | Note |
|---|---|---|
| Preparation | 4-6 weeks | CIM, model, buyer list |
| Marketing | 4-6 weeks | Contact buyers, NDAs |
| First Round | 4-6 weeks | IOIs, narrow the field |
| Mgmt Presentations | 4-6 weeks | Due diligence |
| Final Bids | 4-6 weeks | Binding offers |
| Signing to Closing | 4-12 weeks | Regulatory |
Total timeline: Typically 6-12 months for a full auction process. Negotiated deals (bilateral) can be faster.
Key Takeaways
Key Takeaway
- 6 phases: Preparation, Marketing, First Round, Management Presentations, Final Bids, Signing/Closing
- Timeline: 6-12 months for full auction
- Goal: Create competitive tension to maximize value
- Key documents: Teaser, CIM, IOI, LOI, Purchase Agreement
- Narrow progressively: 50+ → 30 CIMs → 10 IOIs → 3 final bids → 1 winner
Continue Learning
- M&A Interview Questions Guide — Deep dive into M&A technicals
- Accretion/Dilution Explained — Essential merger math
- IB Interview Questions — Complete technical prep
- Enterprise Value vs Equity Value — Core valuation concept