Identify alternative ways to make "First Contact" with a potential acquisition target.

Why is confidentiality important at the time of making first contact and how it can be
ensured?
An acquisition is an action taken by the company where the company buys most of the stake
and ownership of its targeted company in order to control the targeted organization.
Acquisitions when friendly, the target companys management and board have to seek
approval from the shareholders. And to seek the control over the target, the acquiring
company needs to offer a premium on the existing stock price to the shareholders. However
an antagonistic acquisition can take place when the acquisition offer becomes unrequested.
Here the acquirer tries to buy shares directly from the targeted companys shareholders or by
buying the shares through public stock exchange. But the acquirers generally wish and tend
to have a friendly acquisition in this kind of acquisition the post acquisition process becomes
prompt due to the mutual cooperation of both the acquirer as well as the acquired company
whereas it is vice versa in the case of hostile acquisition. (MERTS,1985)
For any kind of acquisition it is vital for the acquirer to first shortlist the target companies,
also the senior staff should be asked to gather as much as information possible of the targeted
companies by using their networks. Then the acquirer should assess the business of the target
company by asking the companys financial statements, their customer base information.
Valuation of the target business is also important for a skilful negotiation of buying and
selling the assets. Valuation methods like calculation of the net asset value, cash flow, price
earnings ratio, cost of acquisition, etc. should be taken into consideration. The experts,
accountants, lawyers, management, shareholders, customers, clients and other such
experienced people should be consulted as if the acquired company doesnt performs as
expected, it can harm our companys goodwill. Hence a quality planning and research should
take place before the acquisition along with the formulation of alternatives to overcome any

of the unexpected uncertainties or outcomes. Moreover the due diligence process should also
be focused properly to lay bare all the companys liabilities that are associated with the
purchase and also to ensure that the target company actually possesses all the mentioned
assets, patents and copyrights. Moreover to inspect any of their contractual future
commitments with their employees or customers and also to notice the changes occurring in
the present existing contracts due to the acquisition. (Very, P.,2001)
Confidentiality is vital before the beginning of substantive discussions during the acquisition
process in order to protect both the parties. All the related information is kept very secretive
and only the required information is shared. Also the Data Protection Act is also used many
times to maintain the confidentiality as it keeps all the information confidential may it be in
electronic or paper format.(Gaughan, P. A.,2010)

REFERENCES

MERTS, G. J., SCHMIDT, O., JOURDEN, J. L., GUINAN, M. E., REMINGTON, M. L.,
FAHBLANDER, A., ... & COREY, L. (1985). Frequency of acquisition of first-episode genital
infection

with

herpes

simplex virus from

symptomatic and

asymptomatic source

contacts. Sexually transmitted diseases, 12(1), 33-39.

Very, P., & Schweiger, D. M. (2001). The acquisition process as a learning process: Evidence
from a study of critical problems and solutions in domestic and cross-border deals. Journal of

world business, 36(1), 11-31.

Gaughan, P. A. (2010). Mergers, acquisitions, and corporate restructurings. John Wiley &
Sons.