Visit our partner https://trymintmobile.com/galbraith to get premium wireless starting at $15/mo. SEE TERMS AND CONDITIONS BELOW. $45 upfront payment for 3-mo 5GB plan ($15/mo equiv.) required. New customer offer for rst 3 mos only. Taxes & fees extra. See https://trymintmobile.com/galbraith for mo...

Visit our partner https://trymintmobile.com/galbraith to get premium wireless starting at $15/mo. SEE TERMS AND CONDITIONS BELOW. $45 upfront payment for 3-mo 5GB plan ($15/mo equiv.) required. New customer offer for rst 3 mos only. Taxes & fees extra. See https://trymintmobile.com/galbraith for more details. The book that changed my life: https://amzn.to/3ZvZyyF If you have any questions, connect with me on LinkedIn: https://www.linkedin.com/in/cameronjgalbraith/ Email me at: cameron@cjgventures.co In this video, I discuss companies and investment banks engage in mergers and acquisitions (M&A)! Disclaimer: The views in this video are strictly my own, and are not those of my employer. #wallstreet #finance #financecareers #banking #investmentbanking Chapters: 00:00 Introduction 00:36 What is M&A? 01:09 Why companies do M&A? 01:47 IB and M&A 03:42 M&A Process 05:11 Hostile M&A 05:48 Success of M&A 06:19 Conclusion Tags: what is M&A?, how does m&a work?, what are mergers and acquisitions?, m&a, M&A 2025, mergers and acquisitions, IB M&A, how to do M&A, investment banking M&A, investment banking M&A process, M&A process, M&A steps, hostile M&A process, shareholder activism, why companies do M&A, best M&A, why companies go through M&A, Script: M&A is a trillion-dollar business, and investment banks make billions advising on these deals. But how do they actually work? At its core, M&A is when one company merges with or acquires another. A merger happens when two companies combine to form a new one – like when Exxon and Mobil merged in 1999 to create ExxonMobil. An acquisition is when one company buys another. This can be friendly, like Disney buying Pixar, or hostile, like when Kraft took over Cadbury. Companies do M&A for a few key reasons: Growth: Instead of spending years expanding, they just buy an existing company. Market Power: Fewer competitors = higher pricing power. Synergies: The magic word in M&A. This means combining companies will cut costs or increase revenue. For example, after a merger, they can fire redundant employees or negotiate better supplier deals. Diversification: If a company is struggling in one sector, it might acquire another to balance risk. Eliminating Competition: Sometimes, big companies buy up rivals just to kill them off. Savage, I know. M&A is big business for investment banks. Their job? Advise companies on the deal, structure the transaction, and help with negotiations. For this, they charge a “success fee” – typically 1-3% of the deal value. Let’s say Company A buys Company B for $10b. The investment bank advising on the deal could make $100 m to $300 m in fees – just for structuring the deal and giving advice! And banks don’t just work for buyers – they also defend companies from hostile takeovers, making even more money in the process. Step 1: Target Identification. The buyer identifies a company they want to acquire. This is often done with the help of investment banks, who scout potential deals. Step 2: Valuation & Due Diligence. Before making an offer, the buyer needs to figure out how much the target is worth. Banks use methods like: Comparable Company Analysis– Comparing it to similar companies. Precedent Transactions – Looking at past M&A deals in the industry. Discounted Cash Flow– Projecting future profits and calculating today’s value. And once the numbers check out, the buyer performs due diligence, digging deep into financials, contracts, and risks. Step 3: The Offer The buyer makes an offer – either in cash, stock, or a mix of both. A cash deal is simple: Company A pays cash to acquire Company B. A stock deal means Company A gives shares in exchange for ownership. Mixed deals use both cash and stock. If the seller agrees, they sign a definitive agreement and move to closing. Step 4: Regulatory Approval Before the deal is finalized, regulators check to make sure it won’t create a monopoly. For example, when AT&T tried to buy T-Mobile in 2011, regulators blocked the deal, saying it would hurt competition. But not all acquisitions are friendly. Sometimes, a company doesn’t want to be bought – but the buyer tries anyway. That’s a hostile takeover. In this case, the buyer can: Go directly to shareholders and buy their stock. Replace the board of directors to force the sale by having a majority. Companies defend themselves using strategies like: Poison Pills – Making the stock unattractive to the acquirer. White Knights – Finding a friendlier company to buy them instead. One of the most famous hostile takeovers? Elon Musk buying Twitter for $44 billion. Twitter initially resisted, but Musk went directly to shareholders and won. Do M&A Deals Always Work? Nope. In fact, over 50% of M&A deals fail to create value. Sometimes, companies overpay and never recover their investment. Other times, culture clashes ruin the integration.