What Institutions Need to Know Before Starting the Merger and Acquisition Process

In 2025, many institutions are using mergers and acquisitions (M&A) to grow their market share and strengthen their competitive edge. In fact, over 80% of CEOs who completed a major acquisition in the past three years plan to pursue another one within the next three years.

While M&As can provide powerful benefits, the process can also be quite complicated and time-consuming. From cultural integration to regulatory hurdles and financial missteps, a lot can go wrong without the right planning and support.

In this article, we’ll explore what organizations should consider before entering the M&A process, map out its key phases, and highlight how an experienced partner like Alden Investment Group can help set your transaction up for success.

What Motivates Institutions to Pursue Mergers and Acquisitions

Merging with or acquiring another company can provide compelling benefits. Here are some of the most common motivations companies cite when pursuing these transactions:

• Expedited growth – M&As can offer a faster path to new markets, products, or technologies, accomplishing in months what organic growth alone could take years to achieve.
• Scale and efficiency – Combining operations with another firm can unlock economies of scale and eliminate redundancies.
• Diversification – Strategic acquisitions can reduce institutions’ reliance on a single product, customer segment, or geographic market.
• Innovation – For companies in highly specialized sectors, buying a firm with specialized R&D, patents, or software can jumpstart innovation and enhance differentiation.
• Defensive positioning – Acquiring a high-value target before a competitor can strengthen market position and preserve long-term differentiation.
• Succession planning – Company leaders who are ready to retire can use M&As to facilitate their exit strategy while preserving their company’s legacy and employee base.

Read More: The Importance of Succession Planning

If any of these reasons resonate with your goals, a well-planned M&A strategy may be one of the smartest moves you can make in 2025.

The Merger and Acquisition Process: A Step-by-Step Guide

If you’re exploring a merger or acquisition in 2025, understanding the steps involved can increase your chances of a successful integration. With that in mind, let’s take a look at the seven stages of a merger or acquisition:

#1 Define Your Strategic Goals

To ensure a successful M&A deal, you need to start by clarifying why the transaction makes sense for your organization at this time. The following questions can reveal your primary motivations:

• Are you trying to enter new geographic markets?
• Do you want to acquire new digital capabilities or technical infrastructure?
• Are you looking to reduce costs or eliminate operational redundancies?
• Are you addressing a succession issue or leadership transition?
• Do you want to diversify your revenue streams, product lines, or customer base?
• Are you hoping to speed up your time-to-market for a specific product or service?
• Do you need access to proprietary intellectual property or specialized talent?
• Are you facing new competitive pressures or trying to protect your market share?

Your answers to these questions can help you determine the best transaction type and deal structure. For example, if one of your goals is to modernize your credit union’s digital capabilities, partnering with an institution that already offers a robust mobile app and digital infrastructure can be a strategic way to achieve that goal more efficiently.

Read More: Capital Raising Strategies for Credit Unions and Community Banks in 2025’s Economy 

#2 Identify and Research Suitable Targets

With your strategic goals in mind, the next critical step is finding potential target companies that align with your goals and growth plans. This stage often requires extensive research. Fortunately, M&A advisors and industry partners can help you identify suitable targets, conduct outreach, and manage early-stage discussions on your behalf.

As you create a shortlist of contenders, look for organizations that:

• Operate in your desired geographic markets or customer segments
• Offer complementary products, services, or technology
• Have strong financial fundamentals
• Demonstrate a sufficient cultural fit and leadership alignment with your organization
• Present clear opportunities to enhance your operational efficiency or revenue growth

Next, narrow down your list by having early conversations with leadership and conducting preliminary reviews. These steps can help you assess each contender’s suitability and interest in a potential transaction.

#3 Understand the Regulatory Landscape

Once you’ve identified a few promising prospects, the next step is to assess whether your proposed transaction is feasible from a regulatory standpoint. M&As can trigger a complex web of legal and compliance obligations, from antitrust laws to industry-specific approvals. These hurdles can impact your timeline, transaction terms, and risk exposure.

Here are several key regulatory areas you’ll want to evaluate early on in the M&A process:

• Antitrust and competition laws – The U.S. The Department of Justice (DOJ) and Federal Trade Commission (FTC) often review M&A deals that may reduce market competition. If your transaction involves significant market share consolidation, prepare for close scrutiny.
• Industry-specific regulations – In highly regulated sectors like financial services or healthcare, M&As may require approval from specialized oversight bodies. For example, credit unions may need to obtain consent from the National Credit Union Administration (NCUA).
• Foreign investment restrictions – If either party involved in your M&A has foreign ownership or international operations, the Committee on Foreign Investment in the United States (CFIUS) may review the transaction to mitigate national security concerns.
• Labor and employment laws – Mergers that involve large employee bases may trigger Worker Adjustment and Retraining Notification (WARN) Act notifications, union contract negotiations, or pension and benefits restructuring, all of which require timely legal review.
• Environmental, social, and governance (ESG) disclosures – ESG factors play an increasingly important role in M&A due diligence in 2025. Depending on your industry, you may need to share details about your institution’s climate risk exposure, workforce diversity, or potential supply chain issues.
• State and local approvals – In addition to federal oversight, many states require separate filings and may conduct their own reviews to assess the transaction’s impact on local markets and employment levels.

Depending on your industry and deal size, regulatory approval can take several months. As a result, you should engage legal and compliance experts early on, prepare for multiple rounds of regulatory inquiries, and factor in sufficient time to implement necessary adjustments.

#4 Conduct Comprehensive Due Diligence

Due diligence is the bedrock of any successful M&A deal. It’s your opportunity to investigate the business you’re about to acquire or merge with before signing on the dotted line.

When done right, M&A due diligence uncovers risks, integration challenges, and value-creation opportunities that may not be obvious at first glance. A well-rounded due diligence process should include:

• Financial due diligence – Review your target company’s financial statements, cash flow trends, revenue composition, debt obligations, and working capital requirements.
• Legal due diligence – Evaluate its contracts, intellectual property, litigation exposure, corporate governance, and regulatory compliance.
• Commercial due diligence – Analyze its market position, customer base, revenue sources, and competitive dynamics.
• Operational due diligence – Assess its current workflows, systems, and supply chain to determine their scalability, efficiency, and reliability.
• HR due diligence – Review its employees’ contracts and compensation structures to identify potential liabilities, assess workforce stability, and maximize talent retention.
• Technology due diligence – Examine the quality and compatibility of its digital infrastructure, software stack, and cybersecurity protocols.

With support from experienced capital advisors, legal counsel, and accounting professionals, you can confirm your target company’s financial health and understand the full scope of its operations and risks with confidence.

#5 Conduct a Thorough Deal Valuation

After selecting a target company and completing thorough due diligence, the next crucial step is determining the business’s value. Beyond ensuring sound financials, this step can influence how shareholders, regulators, and employees perceive the deal.

An experienced financial advisor can help you select the best valuation approach. Some common options include book value, earnings multiples, discounted cash flow, and comparable transactions. The best choice will depend on your industry and business characteristics.

For example, book value is often used to assess companies with a lot of physical assets, while earnings multiples are a better fit for service-based businesses that generate strong profits and have high growth potential.

Read More: Measuring Your Book of Business as a Financial Advisor

#6 Negotiate Your Preferred Deal Structure

After agreeing on a valuation, it’s time to negotiate a fair deal. This can be one of the most nuanced and impactful parts of the M&A process. You’ll need to balance the interests of all parties while carefully considering intricate financial, legal, and operational factors.

Some key elements you’ll need to negotiate include:

• Cash vs. stock – Cash transactions are cleaner and faster, but they may strain your liquidity or limit your flexibility for future investments. Stock deals, on the other hand, preserve your cash and align your long-term interests while diluting existing ownership.
• Earnouts and contingent payments – If you and the buyer or seller disagree on the valuation, these tools can bridge your differences by tying a portion of the purchase price to the company’s future performance.
• Retention bonuses – Retention bonuses can help retain key executives and other employees, preserving their institutional knowledge and reducing post-close disruptions.
• Assumed liabilities – Clarify which debts, leases, or obligations will carry over and factor these into the total transaction value.
• Intangible assets – From specialized intellectual property to strong brand reputation, not all assets can be fully captured on a balance sheet. Even so, these assets can drive significant long-term value.

Navigating these negotiations is easier when you have an experienced M&A advisor on your side. This trusted advocate can guide you through the complexities of negotiation and help you secure more favorable terms.

#7 Clarify Your Integration Plan

Even after identifying the right target, many institutions underestimate the complexity of integration. However, this stage can make or break the success of a merger or acquisition.

To ensure a smooth transition, start integration planning early on. This way, you can pinpoint potential friction points between leadership teams and set clear expectations with employees.

Some areas to prioritize during your integration planning process include:

• Cultural alignment – Even the most financially compelling deals can unravel if cultural integration fails. Thus, carve out sufficient time to analyze both companies’ cultures. Are they hierarchical or collaborative? Risk-averse or growth-driven? These elements can influence everything from employee morale to productivity, so you want to make sure your teams are on the same page.
• Technology and systems integration – Poor systems integration can bring business to a standstill. To avoid disruptions, develop a comprehensive integration roadmap that outlines the costs, timelines, dependencies, and contingency plans for merging various platforms and software systems. IT consultants can help you assess your systems’ compatibility and prioritize the platforms that are most critical to your daily operations.
• Talent retention – Company restructuring can have a significant impact on employees’ mental health. During transactions, some may experience anxiety about their job security or evolving roles at the company. To maintain morale and reduce turnover, communicate about the merger or acquisition transparently, encourage employee feedback, and proactively address any concerns. Also, make sure to clearly define their employees’ evolving roles and responsibilities, offer advance notice of any layoffs, and explain how their benefits and compensation plans may change moving forward.
• Client and stakeholder communication – After taking care of your employees, turn your attention to your customers, clients, investors, and suppliers. Some of these stakeholders may also have concerns or questions about the transition. To ease their fears, explain how the merger or acquisition will benefit them and be open about what’s changing. Prepare a detailed external communications plan that includes client outreach, press releases, updated branding, and FAQs.

Once the deal is done, it’s easy for your integration plans to lose momentum. Scheduling regular integration check-ins every few months can help you keep your new teams accountable and ensure you complete everything that’s required to see through a successful transition.

Ensure a Seamless Merger or Acquisition with Alden Investment Group

Mergers and acquisitions are complex transactions that require meticulous planning, careful execution, and strategic support. When done right, they can unlock exceptional opportunities for accelerating your growth and honing your competitive edge.

No matter your goals, the right advisory team can set the stage for a smoother integration. For example, at Alden Investment Group, we help institutions:

• Align deal structure with their balance sheet, tax strategy, and long-term vision
• Raise capital through an optimal mix of debt, equity, or hybrid financing
• Navigate regulatory complexities, from SEC to CFIUS
• Facilitate seamless post-transaction integration to retain talent and maintain continuity

We can also offer objective expertise during the valuation phase and negotiation support as you structure your deal.

Ready to take the next step? Contact Alden Investment Group today to discuss how we can support your M&A success!

Sources:

PWC. 2025 Outlook Global M&A Industry Trends.
https://www.pwc.com/gx/en/services/deals/trends.html

U.S. Department of Labor. WARN Act Compliance Assistance.
https://www.dol.gov/agencies/eta/layoffs/warn

Financier Worldwide. Integrating ESG considerations into the due diligence process.
https://www.financierworldwide.com/integrating-esg-considerations-into-the-due-diligence-process

M&A Community. From start to finish: How long does an acquisition take?
https://mnacommunity.com/insights/how-long-does-an-acquisition-take/

Stockholm School of Economics. How Do Mergers Affect the Mental Health of Employees?
https://www.hhs.se/contentassets/792c46b0593c459b82c6e84e7a2b26ec/how_do_acquisitions_impact_the_mental_health_of_employees__june_2021.pdf