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The Merger and Acquisition Process: Key Steps Explained

Explore the merger and acquisition process in Switzerland, from due diligence to post-merger integration. Learn the essential M&A steps for a successful deal.

Finance d'entreprise

Table of contents

Introduction
What is the Merger and Acquisition (M&A) Process?
Key Steps in the M&A Process
What is M&A Due Diligence?
How is Valuation Done in M&A?
The M&A Transactions Under Swiss Law
The M&A Approval Process
The "Squeeze-Out" Phase
The Post-Merger Integration Phase
Financing Your Acquisition
Conclusion

Introduction

The merger and acquisition (M&A) process is one of the most critical steps businesses take to expand, innovate, and strengthen their market position. Whether you're a startup or an established company, understanding the M&A process is vital to ensure a smooth transaction.

This article breaks down the M&A process in Switzerland from the approval steps to the post-merger phase. It covers key areas, including M&A due diligence and the regulatory framework that businesses must follow.

What is the Merger and Acquisition (M&A) Process?

The merger and acquisition (M&A) process involves a series of steps that allow companies to merge or acquire another business. M&A transactions are designed to help businesses expand their capabilities, enter new markets, or achieve strategic objectives.

In a Swiss perspective, the M&A landscape follows a set of legal, financial, and regulatory frameworks that businesses must adhere to. Understanding both the global and local M&A processes will help you navigate the complexities involved. For example, the Swiss Merger Act outlines the specific regulations and requirements for mergers and acquisitions in the country.

Key Steps in the M&A Process

There are several key steps involved in completing a successful M&A deal. Below are the essential M&A process steps:

Step 1: Identifying and Researching Targets

The first step in any M&A transaction is to identify potential companies to merge with or acquire. This process involves market research and an assessment of the target’s business model, financial health, and strategic fit.

Step 2: Negotiating the Deal

Once a suitable target is identified, negotiations take place. During this phase, both parties discuss the terms of the deal, including the price, structure, and timelines.

Step 3: Due Diligence

M&A due diligence is one of the most critical phases of the process. During this step, both parties examine the target company’s financials, operations, legal matters, and more. The examination helps identify risks and ensures transparency before finalizing the deal.

Step 4: Finalizing the Deal and Legal Documentation

Once due diligence is complete, the deal moves forward to signing contracts and finalizing the terms. Legal teams ensure all necessary documentation is in place to protect both parties.

Step 5: Post-Merger Integration (PMI)

After the deal is closed, the focus shifts to post-merger integration. This process involves combining the two companies’ operations, cultures, and systems into one unified entity.

What is M&A Due Diligence?

M&A due diligence refers to the in-depth investigation that takes place before finalizing an M&A deal. It’s an essential step to verify the target company’s financial health, business practices, legal standing, and any potential risks associated with the deal.

Key areas of financial due diligence include:

Financial statements and performance review
Intellectual property rights and patents
Employee contracts and benefits
Tax liabilities
Environmental and regulatory compliance

This thorough process ensures that the acquiring company makes an informed decision, reducing the risk of unpleasant surprises post-acquisition.

How is Valuation Done in M&A?

Valuation in mergers and acquisitions is crucial to determining the worth of a company. It involves assessing the financial performance and potential of the target company. Several valuation methods are used, including:

Comparable Company Analysis (CCA): Comparing the target with similar companies in the industry.
Precedent Transaction Analysis (PTA): Reviewing past transactions to determine a fair value.
Discounted Cash Flow (DCF) Analysis: Estimating the present value of the company based on future cash flow projections.

For Swiss businesses, accurate valuation is especially important due to the country’s strict regulatory environment and the high level of market transparency.

The M&A Transactions Under Swiss Law

The legal steps in M&A transactions ensure compliance with both national and international laws. In Switzerland, M&As are governed by various legal regulations, including corporate law, antitrust regulations, and labor laws.

The M&A Transaction Structure: Stock vs. Asset

Choosing the right structure is a balancing act between speed and risk.

Stock Purchase (Share Deal)

In a stock purchase, you buy the company’s "container." You acquire the shares, which means you automatically own everything inside—all assets, all staff, and all unseen liabilities.

Pros: It is cleaner and faster. Contracts with suppliers and customers usually stay valid because the legal entity hasn't changed. Sellers often prefer this because they may get a tax-free capital gain in Switzerland.
Cons: You inherit the company's "past." If there is a hidden tax bill or a pending lawsuit from three years ago, it is now your problem.

Swiss Tip: Be careful of Indirect Partial Liquidation. If you use the target company's own cash to pay off the debt you used to buy it, the Swiss tax office might re-classify your tax-free gain as taxable income.

Asset Purchase (Asset Deal)

In an asset purchase, you "cherry-pick" what you want. You might buy the machinery and the patents, but leave behind the old debt and the messy office lease.

Pros: Lower risk. You only take what you sign for. You can also "step up" the value of assets for better tax depreciation.
Cons: It is complex. You must individually transfer every single item—every truck, every patent, and every contract. In Switzerland, this often requires consent from every third party (like landlords or banks) unless done under the Swiss Merger Act.

Swiss Tip: Under the Swiss Merger Act, an "Asset Transfer" can happen in one go via the Commercial Register. However, it carries a 3-year joint liability for the seller.

The M&A Approval Process

The merger approval process involves obtaining the necessary clearances from relevant authorities. This typically includes shareholder approvals and regulatory checks. In Switzerland, deals that involve large companies or cross-border transactions require careful scrutiny by antitrust authorities.

Once approval is granted, the deal proceeds, and both parties can move forward with the integration phase.

Shareholder and Board Approval

Private Companies: Usually requires a board resolution. If the bylaws (Articles of Association) have "transfer restrictions," the shareholders must formally vote to let the new owner in.
Public Companies: If you buy more than 33⅓% of a Swiss-listed company, you are legally forced to make an offer to buy all remaining shares (unless the company has an "opting-out" clause).

Regulatory and Antitrust (COMCO)

The Swiss Competition Commission (COMCO) must be notified if the companies involved meet certain financial "thresholds." As of 2026, you generally must file if:

Your combined worldwide turnover is at least CHF 2 billion, OR
Your combined Swiss turnover is at least CHF 500 million.

Note: Even if you are smaller, if ComCo previously labeled your company as "market dominant," they might still require a review of your deal.

The "Squeeze-Out" Phase

If you acquire 90% or more of a company's shares in a merger, Swiss law allows you to "squeeze out" the remaining 10% of minority shareholders. You can do this by offering them cash compensation, enabling you to gain total control and facilitate easier integration.

The Post-Merger Integration Phase

Once the stamps are on the contracts and the regulators say "yes," the real work begins. Post-merger integration (PMI) refers to the process of combining the operations, systems, and cultures of the merged companies. This phase is often the most challenging but also the most critical to ensuring the long-term success of the deal.

Key strategies for effective post-merger integration include:

Aligning business cultures: Addressing cultural differences between merging companies.
Streamlining operations: Integrating systems, processes, and technologies.
Retaining key employees: Ensuring the retention of talent to maintain business continuity.

Align business cultures after integration

Financing Your Acquisition

Financing plays a crucial role in the success of an M&A deal. There are several methods of acquisition financing, including:

Debt Financing: Borrowing funds from financial institutions.
Equity Financing: Raising capital by issuing new shares.
Seller Financing: The seller agrees to finance part of the purchase price.

In Switzerland, businesses often use a mix of these financing methods to fund their acquisitions, depending on market conditions and company strategy. Additionally, sustainability becomes an increasingly important factor in corporate decision-making. Therefore, companies are exploring ways to align their acquisitions with Environmental, Social, and Governance (ESG) criteria.

Conclusion

The M&A process is intricate and involves several key steps, from initial negotiations to post-merger integration. Understanding each phase—especially in Switzerland—is crucial to ensuring the success of your transaction. By partnering with trusted advisors like Fiduciaire Vaudoise, businesses can navigate the complexities of M&A deals with confidence.

As a leading financial and legal advisory firm in Switzerland, our team offers expert advice to guide businesses through the M&A process. From legal and regulatory advisory to financing oversight, we can ensure that your transaction is efficient, compliant, and aligned with your strategic goals.