Mergers and Acquisitions (M&A) of companies is an essential part of business in
America and around the world. There are many different steps and to a M&A deal, the three that
will be considered today are evaluation, contract negotiation, and on-boarding. Looking at them
both from a business standpoint but more importantly from a biblical standpoint.
Beginning a M&A deal starts with evaluation of a potential target or business that is to be
acquired by a different company. The type of company that they are wanting to merge with and
how they are going to do it. Will it be a vertical or horizonal merge? Will it be a consolidation or
a merge? Another consideration is how the merge will be paid for, there are several ways to do it,
all cash, all securities, a combination of cash and securities, or using debt. The buyer will need to
approach the seller and ask for information that is not public to determine if this is a good move,
this is usually done only after an nondisclosure agreement has been signed this allows the buyer
to see confidential information that is not made available to the general public without the fear of
that company then disclosing it or selling that information. This is a chance for the buyer to see if
the managers of the target company have been being faithful stewards or if they need to come in
and get the house in order.
Another part of M&A is contract negotiation. This part usually begins with a terms sheet
being made by the buyer with input from the seller. This will usually have the major terms in it
but will have a great distance to go before a final deal is reached. A letter of intent will usually
follow a term sheet and will be slightly more detailed and may or may not be binding. It might
also contain a specific price or a formula to determine a price. This can be used if the buyer is not
quite ready to make the deal or needs to wait for financing or to make investors aware that a deal
is in the works. “Once the due diligence process has been completed, the law firms representing
the parties prepare a detailed merger agreement.” (Gaughan, 2018)
On-boarding is the process of integrating two companies into one or workers from one
company into the other or both companies into one large company depending on the type of
merger. This can make or break the climate of the workplace depending on how it is
accomplished. The workers probably had no say as to whether the companies merged and are
now working for a different company than they were originally hired to work at. Procedures may
be different, tone, environment, and even expectations. It is important to give clear expectations,
show them how success is defined, it could also be helpful to have new employees be assigned to
an employee that has been in the company a while to help show new employees the ropes and
culture.
Regarding evaluating a company to see if it fits the needs of the buyer, I think these fits
well into a Christian worldview The bible tells us to be good stewards of what He has given us. 1
Corinthians 4:1-2 says,“This is how one should regard us, as servants of Christ andAstewards of
the mysteries of God.A2Moreover, it is required of stewards that they be found faithful.”A(ESV,
2016) Checking to make sure that the company is a good fit and that it has been managed well
and how much it will cost can all be considered to being a good steward.
One area that I am not sure about fitting into a biblical worldview is that of the letter of
intent. It seems a little bit wishy washy. We want to do this but are not sure we want to do it now
or yet or whatever the thing might be. The bible says to not swear an oath “Let what you say be
simply ‘Yes’ or ‘No’; anything more than this comes from evil.” Matthew 5:37 (ESV, 2016).
However, John Piper makes a good point in an interview saying that the verse in Matthew is
saying that overall, we should not have to swear an oath in order that someone should believe
what we have to say, but a simple yes or no with a follow through. Piper also mentions that in 2
Corinthians 1, Paul talks about having plans to visit but ultimately not being able to come as
planned. “I wanted to visit you on my way to Macedonia, and to come back to you from
Macedonia and have you send me on my way to Judea.” 2 Corinthians 1:16 In Proverbs 16:9 it
says, “The heart of man plans his way, but the LORD establishes his steps.” (ESV, 2016).So,
while at first glance the letter of intent may seem pointless if it is not binding, but it can be used
to steward the company well in that while we plan how we want to go God ultimately determines
the steps. (Piper, 2020)
These steps in M&A do fit into a biblical worldview if they are done honestly and
correctly out of a heart of wanting to do what is best for the company and the people that work
there and not out of a selfish money mindset. Most standards of ethics whether or not people
want to believe it come from biblical values. Overall M&A does fit into a biblical worldview.
References
English standard version (ESV) - version information - biblegateway.com. (2016).
https://www.biblegateway.com/versions/English-Standard-Version-ESV-Bible/
Gaughan, P. A. (2018). Mergers, acquisitions, and corporate restructurings. Wiley.
Piper, J. (2020, April 3). Is it a sin to back out of a commitment?. Desiring God.
https://www.desiringgod.org/interviews/is-it-a-sin-to-back-out-of-a-commitment
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