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Financial Services Firms: Governance, Regulations, Valuations, Mergers, and Acquisitions, 3rd Edition by Zabihollah Rezaee

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Chapter Fourteen

Bank Merger and Acquisition Process

The process of merging or acquiring two banking organizations is extremely complex; it requires a great deal of time and effort from both buyer and seller. The business, legal, operational, organizational, accounting, and tax issues all must be addressed if the merger or acquisition is to be successful. Throughout the process, valuation can be an important input to the decision-making process, from initial target analysis through integration of the entities.

Merger and acquisition (M&A) strategies are extremely important in order to derive the maximum benefit out of a merger or acquisition deal. It is quite difficult to decide on the strategies of M&A, especially for those companies that are going to make a merger or acquisition deal for the first time. In this case, they take lessons from the past M&A that took place in the market between other companies and proved to be successful.

The M&A process, shown graphically in Exhibit 14.1, can be viewed as having three broad phases: strategy phase, negotiation and investigation phase, and finalization and integration phase.

Exhibit 14.1 Merger and Acquisition Process

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This chapter reviews the three broad phases of a merger or acquisition and describes the steps normally undertaken. These are not necessarily the steps that would be taken in every situation. They represent, however, ...

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