M&A: Strategy and Value

M&A transactions (mergers and acquisitions) represent a complex, multi-phase process in which one company purchases or merges with another to achieve growth, access new markets, improve efficiency, and increase capital. In the world of corporate governance, M&A is a powerful tool for strategic transformation, yet it is a complex undertaking that requires careful planning.

In the initial phase of a transaction, the target company is identified and preliminarily screened, while the strategy and key parameters of the transaction are defined. This is often followed by the formalization of a Letter of Intent (LOI), which outlines the general terms, price, and exclusivity of negotiations.

One of the key stages of the preparatory phase of an M&A transaction is the preparation of the due diligence report. This analysis involves coordinated work by experts from various fields, aimed at assessing the status of the subject of the transaction from commercial, financial, and legal perspectives.

Legal due diligence represents a particularly complex segment of this report, as it requires the involvement of lawyers specialized in multiple areas of law, including contract law, corporate law, labor law, intellectual property law, and more. Through a detailed review of all contractual relationships of the target company, as well as an examination of all active engagements, such as employment relationships, intellectual property status, potential litigation, administrative proceedings, claims, or any other matters that may positively or negatively affect the investment, his analysis aims to identify potential risks and liabilities that could impact the transaction’s value and its further course.

Based on the results of this report, the investor decides whether to continue negotiations, revise the price, abandon the transaction, or take steps necessary for successful future operations.

In the Republic of Serbia, M&A transactions are regulated by the Companies Act, the Law on Obligations, and the Competition Protection Act, meaning that every transaction must comply with the domestic legal and regulatory framework. In practice, transactions are most commonly executed through the purchase of shares in the target company, though more complex structures such as spin-offs, company divisions, or changes in legal form are sometimes applied.

After the preparatory phase is completed, the finalization of the main agreement, the Share Purchase Agreement (SPA) follows. This act regulate the rights and obligations of the contracting parties. Once the transaction is concluded, changes are registered in the relevant registries, and business integration takes place to achieve the expected results.

Although M&A may appear at first glance as a financial transaction, it essentially represents a complex process whose success depends on strategic planning, proper selection of the target company, and thorough preparation. Only a carefully conducted due diligence process with professional support ensures that the transaction achieves its full potential and delivers real value to all participants.