If you are reading this, you are probably in one of two situations:

You are actively planning a deal and you need a clean, end-to-end map so you do not miss anything important.
You are trying to understand what “a normal M&A process” even looks like, because everyone speaks in acronyms and timelines that feel mysteriously vague.

Either way, you are in the right place. This guide walks through the full M&A lifecycle—from the first strategic thesis to post-close integration—using practical steps, plain language, and the real deliverables teams actually need in 2025.

First, what the M&A "process" really is

M&A is not one event. It is a chain of decisions that reduce risk over time:

Early steps are about fit (does this target help our strategy?).
Middle steps are about truth (is the business as healthy as it looks?).
Late steps are about commitment (contracts, approvals, money movement).
Post-close steps are about making the deal real (integration and value capture).

When deals go wrong, it is rarely because someone forgot a signature. It is usually because the strategy was fuzzy, diligence was shallow, or integration was treated like an afterthought.

The M&A process in 8 phases

You can think of most acquisitions as moving through these phases (some overlap, but the order holds):

Strategy + deal thesis
Target list + sourcing
First contact + NDA + initial information
Indication of Interest (IOI) / Letter of Intent (LOI)
Due diligence (deep dive)
Valuation + structure + financing
Definitive agreement + approvals + closing
Post-merger integration (PMI)

Now let's walk through each phase with the specific outputs you should aim to produce.

1) Strategy: write the deal thesis before you pick a target

A good acquisition starts with a sentence like:

“We are buying X to achieve Y, and we will know it worked when Z happens.”

That sounds simple, but it forces clarity. Your deal thesis should include:

Strategic intent: growth (new market), capability (new product), efficiency (cost synergies), or defense (remove a threat).
Synergy hypothesis: what specifically gets better after the deal (distribution, pricing power, engineering speed, procurement, etc.).
Non-negotiables: geography, regulatory constraints, customer segment, margin profile, security/compliance needs, tech stack constraints.
Walk-away triggers: what would make you stop the deal even if it is emotionally hard (customer churn, legal exposure, security gaps).

Output to produce: a 1–3 page “investment memo” that you can hand to your board, your CFO, and your integration lead.

If you cannot write this memo clearly, do not start diligence yet. You will waste time and end up negotiating against yourself.

2) Targeting: build a list like an operator, not a tourist

A useful target list is not “companies we admire.” It is “companies that match our thesis.”

Use filters that actually matter:

Product fit: overlaps, complements, or replaces your roadmap?
Customer overlap: same buyer persona, same channel, or a clear cross-sell path?
Financial reality: revenue quality, margins, retention, concentration risk.
Operational compatibility: talent, culture, delivery model, security posture.

Output to produce: a ranked list with 10–30 targets, each with a one-paragraph rationale.

3) First contact: control information flow early

Early M&A is about information hygiene. You want enough detail to assess fit, without oversharing.

Typical flow:

Teaser → NDA → CIM / brief data pack → management call → LOI.

At this stage, treat document handling as part of deal execution. Leaks happen because someone forwards the wrong file, uses the wrong link settings, or shares a folder with broad permissions that never get tightened.

Practical guardrails:

Share documents with link expiry.
Use identity-bound access (viewer verification) when possible.
Keep a clean audit trail of who accessed what and when.
Separate "marketing" materials from sensitive operational data.

This is exactly why many teams move early diligence materials into a secure data room like Peony instead of emailing attachments around. Peony provides dynamic watermarking, screenshot protection, and page-level analytics to keep your M&A documents secure and trackable.

4) LOI: agree on the headline terms before you spend real money

A Letter of Intent is where the deal becomes real. You are not finalizing every term, but you are aligning on:

Price and structure (cash, stock, earnout, rollover equity)
Scope (asset purchase vs. stock purchase; which entities are included)
Exclusivity period (how long you get to diligence without being shopped)
Key conditions (financing, approvals, regulatory clearance, key employee retention)
Timeline (diligence window, signing target, closing target)

Important: treat exclusivity like a clock you paid for. If you do not have a diligence plan ready, you will burn your own leverage.

5) Due diligence: verify reality, not just numbers

Diligence is not one checklist. It is multiple risk investigations running in parallel. In 2025, the highest-value diligence is often in areas that never appear on a “classic” spreadsheet: security, privacy, IP, and operational resilience.

Here is a sample data room structure (simple, but complete):

Sample M&A data room folder structure

Corporate + Cap Table
- Entity docs, bylaws, board consents, shareholder agreements
Financials
- P&L, balance sheet, cash flow, tax filings, revenue recognition notes
Customers + Revenue
- Top customer list, contracts, churn, pipeline, pricing, renewals
Legal + Compliance
- Material contracts, disputes, policies, data processing agreements
Product + Technology
- Architecture overview, roadmap, SLAs, incident history
Security + Privacy
- Security program, access controls, pen test summaries, vendor risk, privacy posture
People + HR
- Org chart, comp bands, equity grants, retention risks
IP
- Patents, trademarks, OSS usage, assignments, contractor agreements
Operations
- Key vendors, facilities, business continuity, insurance
Integration Planning

Proposed org design, systems map, Day 1 needs, comms drafts

A secure platform matters here because diligence inherently involves sensitive material and many external parties. Peony provides secure data rooms with identity-bound access, page-level analytics, and dynamic watermarking to keep your diligence materials secure and trackable. Even the FTC's merger guidance ecosystem emphasizes precision, documentation, and traceability in how transactions are structured and evaluated—your internal process should be equally disciplined. (Federal Trade Commission)

6) Valuation + structure: make the economics survive reality

Price is rarely “just a multiple.” Real deals live in the details:

Working capital adjustments (protects buyer from closing with an empty tank)
Earnouts (align incentives, but can create post-close conflict)
Escrow / holdbacks (coverage for reps & warranties claims)
Representations & warranties + indemnities (what the seller promises is true)
Tax structure (asset vs stock has real consequences)

Best practice: run "downside math" before you get excited. If your base case is beautiful but your downside wipes out returns, your price is too high or your integration plan is too weak.

7) Signing + closing: approvals, filings, and the boring steps that can still break deals

Closing is where process discipline pays off.

Common closing items include:

Final definitive agreement + disclosure schedules
Financing documents (if applicable)
Third-party consents (key customer contracts, lenders, leases)
Employment/retention packages for key talent
Regulatory approvals (jurisdiction-dependent)

In the US, some transactions may trigger Hart-Scott-Rodino (HSR) premerger notification analysis, where valuation rules and what you "hold as a result of the transaction" matter. Even if your deal does not require filing, understanding how regulators define transaction value is useful discipline for internal decision-making. (Federal Trade Commission)

8) Integration: where value is either created or quietly lost

This is the part too many teams “plan later.” Please do not do that.

A healthy integration has three layers:

Layer 1: Day 1 continuity (no chaos)

Payroll, systems access, customer support, internal comms
Clear org structure and reporting lines
A single source of truth for decisions

Layer 2: The first 30 days (stabilize + retain)

Retain key people (especially product, security, customer owners)
Communicate clearly to customers (what changes, what does not)
Map systems and decide what merges vs. stays separate

Layer 3: The first 100 days (synergy capture)

Consolidate tools and workflows where it reduces friction
Rationalize product roadmap
Track synergies like you track revenue: owners, deadlines, metrics

Tip that sounds small but matters: assign an Integration Owner with real authority (often called an IMO lead). If integration is "everyone's job," it becomes no one's job.

Common ways deals fail (and how to prevent them)

Vague thesis: you cannot integrate toward a goal you never defined.
Overconfidence in diligence: you need proof, not vibes.
Ignoring security/privacy: modern deals can implode from a hidden breach or weak controls.
Underinvesting in integration: synergies do not "show up," they are built.
Bad communication: uncertainty makes employees and customers assume the worst.

Q&A Section

What's the best secure data room platform for M&A due diligence?

Peony offers secure data rooms with identity-bound access, page-level analytics, and dynamic watermarking for M&A due diligence. With screenshot protection and link expiry, you can keep your diligence materials secure while tracking engagement. Peony also offers integrated e-signatures, combining secure sharing with signing workflows in one platform.

How do I prevent document leaks during M&A due diligence?

Peony offers dynamic watermarking and screenshot protection to prevent unauthorized sharing. With identity-bound access, you control who can view your documents, and link expiry ensures access doesn't last forever. You can also revoke access instantly if needed, providing better control than email attachments or basic sharing links.

What should I prioritize in diligence in 2025?

In addition to financials and contracts: security posture, privacy obligations, IP ownership, and customer concentration risk. Use a secure data room like Peony with page-level analytics to track which documents stakeholders actually review, helping you identify areas of concern early.

Final thought

A good M&A process is not “aggressive.” It is calm, structured, and relentlessly clear. If you treat each phase as a gate—strategy → diligence → signing → integration—you will make fewer emotional decisions and far fewer expensive surprises.

And if you want one simple mantra to hold onto: the deal is not done when you close. The deal is done when the value shows up.

Create Your Data Room

Mergers and Acquisitions Process Guide in 2025: Complete Guide from Strategy to Integration