The A-Z Guide to M&A Pipeline Management

M&A pipeline management

Nearly 50,000 M&A deals took place worldwide in 2022. Although vastly different in detail, all M&A deals involve a time-proven chain of events that maximizes deal success. These steps or deal phases are reflected in the M&A pipeline.

What is an M&A pipeline?

The M&A pipeline is the sequence of events during an M&A transaction.

Experienced dealmakers and global M&A advisory firms emphasize the five stages of the M&A pipeline.

1. Preliminary deal sourcing2. Negotiations and letter of intent (LOI)3. Due diligence4. Closing5. Post-deal integration
Stages of the M&A pipeline

How to build an M&A pipeline?

M&A itself is a complex activity with a low success rate. As shown in M&A studies, up to 90% of deals fail. To succeed or have a chance for success, each deal requires wise planning across all M&A pipeline stages:

  1. Preliminary deal sourcing
  2. Negotiations and letter of intent (LOI)
  3. Due diligence
  4. Deal closing
  5. Post-deal integration

Acquisition strategy and deal sourcing

The M&A pipeline begins with a relevant, realistic, and actionable acquisition mission shaping the deal sourcing direction, activities, and target entry criteria. Deal sourcing itself is just a brief overview of acquisition prospects.

The buyer’s corporate development team finds appropriate and fruitful targets depending on M&A goals. If there is not enough publicly available info, the deal team prepares the initial data request.

M&A goalDeal sourcing targets
Eliminate competitionCompanies in the same industry that offer the same products and services to the same audiences.
Improve efficiencyCompanies in the same industry but in a different place in the supply chain. 
Improve products and servicesCompanies that add value to your customers with technology, extra services, and products.
Diversify business and improve resilienceCompanies in non-competitive industries and geographies.

Negotiations and letter of intent (LOI)

Businesses contact potential acquisition targets to discuss acquisition planning aspects and point out legal consequences. Deal parties discuss the following aspects while negotiating the deal and finalizing the letter of intent (LOI): 

  • Deal structure. A deal structure (stock purchase, asset purchase, merger) affects taxes, transferability of contracts and licenses, liabilities, financial reporting, and other aspects. Thus, asset purchase deals do not inherit the target’s tax liabilities.
  • Deal price. Decide on the deal price, price adjustments, future budget plans, and payment options (all-cash, all-stock, or mixed). All-cash deals outperform all-stock ones in shareholder returns by 4.7%
  • Due diligence aspects. Agree on the scope of the due diligence review, and discuss the due diligence process terms and conditions.
  • Antitrust implications. About 14% of large mergers break due to anti-trust violations. If your deal is $111.4 million or greater, you may need to file a premerger notification to ensure antitrust compliance. 
  • Binding deal terms. Discuss non-disclosure and non-solicitation agreements, break-up fees, and transaction costs. Thus, transaction costs may take up to 4% of the total deal value.

Due diligence

Due diligence is the thorough investigation of the target company aimed to extract transaction opportunities and minimize associated risks. 

Due diligence can be the following:

  • Buy-side. The acquiring company investigates the target’s business model to clear out the transaction’s risks and understand the benefits. 
  • Sell-side. The seller thoroughly evaluates itself before the transaction to organize documentation for buy-side due diligence, fix business flaws, and ensure a fair deal price.

Both buy-side and sell-side should investigate financials, human resources, operations, technology, sales and legal aspects, and taxes.

Due diligence is a time-consuming and costly process that may take 60 days on average. Successful due diligence is a game changer that captures potential value, reveals valuable data, and prevents catastrophic failures. On the contrary, inadequate investigation is the primary reason for 60% of M&A failures.

Deal closing

Corporate development teams renegotiate several deal terms, including price adjustments, due to risks and opportunities revealed during the due diligence stage. Companies also finalize warranties, limitations, and post-deal integration activities. These provisions are reflected in the purchase agreement based on the chosen deal structure.

Post-deal integration

Once the deal closes, post-merger integration (PMI) begins. It involves several phases, including planning, PMI due diligence, Day 1, Day 100, and beyond. Integration team members should work on finances, human resources, IT technology, marketing and sales, logistics, procurement, operations, and research & development (R&D). 

Beginning integration planning early boosts your success chances. According to PWC M&A research, successful dealmakers finish post-merger integration and begin reaping benefits within 1.5 years.

Source: PWC

Important note: PMI can be a significant deal breaker if planned too late and executed poorly. As much as 70% – 90% of deals break during this M&A phase, with companies risking to lose key employees.

What exactly should you track on an M&A pipeline?

What to track on the deal pipelineExplanationBenefit
Target value driversClearly indicate and track value drivers associated with each company on your target list, such as customer base, talent, technology, supply chain, etc.Track potential targets based on your business objectives.
Target by M&A stageSee how many targets sit at each M&A pipeline stage. Example: 8 targets at deal sourcing, 5 targets at negotiation, and 3 targets at due diligence.Reevaluate “strategic fit” criteria and optimize deal sourcing.
Time to progress on the M&A pipelineTrack the time target companies need to move across the pipeline.Understand how efficiently each stage of your M&A process works.
Target rejection reasonsRecord the reasons acquisition targets get rejected at each M&A stage.Identify deal breakers from both parties at each M&A stage and address related issues.
Tasks at each M&A pipeline stageTrack deal progress and task count during each M&A phase.Control M&A execution and respond to arising issues as soon as possible.
Issues and risks throughout the M&A pipelineIdentify M&A risks and their sources throughout the M&A lifecycle. Emphasize issues revealed in the post-due diligence phase.Correct the due diligence process, strengthen weak business areas, and minimize overlooked issues in the future.
Performance against growth objectivesCompare M&A performance metrics against growth objectives regularly in the post-deal phase. Set realistic growth objectives and correct your M&A approach for maximum performance.

Deal teams face the three most common challenges at M&A pipeline stages:

  • Data accuracy. Online databases and market analyses may not reflect the full picture or show inaccurate info regarding sourced targets. In this case, acquirers make initial data requests to keep the potential deal moving forward.
  • Disconnected technology. M&A activities may slow down as disconnected departments spend a lot of time exchanging documents and managing file versions via email.
  • Cultural clashes. Cultural differences produce misunderstandings resulting in failed deadlines, overlooked risks, and poor communication.
  • Talent loss. Businesses should track company personnel risks and incentivize employees with financial reward based on performance, loyalty, and other criteria.

Best practices on M&A pipeline management

Check industry-leading practices to streamline M&A pipeline management:

  • Use project management software. Centralize communication and M&A pipeline management in one workspace. It helps due diligence team members plan activities and increase accountability.
  • Make integration part of the acquisition strategy. You will perform better than 62% of organizations if you engage in developing integration plans way ahead of the deal closing.
  • Make a value-creation plan in advance. Set up an integration office to supervise the process, have a detailed integration execution plan, visualize synergy targets, and track M&A progress. A whopping 76% of businesses don’t follow these robust integration practices.

Challenges of using Excel for M&A pipeline management

Excel spreadsheets are not inherently wrong. However, if spreadsheets stand at the core of M&A pipeline management, they may significantly slow down the deal flow and deteriorate the deal value for a few reasons. 

Excel challengeExplanation
Lack of automationDue diligence teams need to manually enter data into spreadsheets, which is labor-intensive and time-consuming.
Scalability issuesM&A participants have to make incomprehensible efforts to update dozens of spreadsheets while navigating multiple deals.
Security issuesSpreadsheets are prone to unsolicited file sharing, data breaches, and accidental information loss.
High error frequencyThe chances of input errors skyrocket when dozens of employees enter data manually. Up to 90% of all Excel documents contain errors.

Benefits of M&A pipeline management software

M&A tools up to 40% of financial synergies, according to Accenture’s research. Successful businesses use dedicated M&A pipeline management software, such as virtual data rooms, to maximize project efficiency and secure sensitive data.

A virtual data room is a secure digital platform with dedicated tools for the full M&A lifecycle. Data rooms offer project management features helping you to do the following:

  • Forget about unwieldy and inconvenient exchange of files. Upload, store, download, and share unlimited files with deal parties and have 24/7 access to the synced file repository.
Upload files to VDR
  • Minimize administrative efforts. Assign collaborators and user roles in bulk, set up notifications, and use automatic index numbering to minimize manual input when managing data and users.
Assign collaborators in a VDR
  • Make M&A a collaborative and efficient process. Redact sensitive info in deal files, exchange due diligence checklists, and use Q&A workflows with approvals for faster decision-making.
Use the VDR to assign the user roles
  • Ensure strategic communication transparency. Contact deal participants at any time due to in-app messaging and system notifications. Using group discussions and audit logs holds team members accountable.
Use VDR to ensure strategic communication transparency
  • Simplify reporting. Generate drill-down data room usage reports based on automatically collected metrics, like document views, prints, downloads, user logins, Q&A decisions, etc.
Reporting in virtual data room
  • Ensure top-notch security. Upload, exchange, and store documents safely using granular access permissions, file expiration, remote file access management on any device, and other features.
Ensure security for the files in a virtual data room

M&A pipeline template example

You can build and implement an M&A pipeline template to track cost and revenue synergies or cross-reference past performance and current results. 

To build one, you should list the acquisition targets and their metrics, deal stages, deal progress, project leads, etc. You can use spreadsheets for your M&A template or track metrics directly in your data room or another project management platform.

Key takeaways

  • The M&A pipeline is the sequence of events during the M&A transaction.
  • The M&A pipeline steps begin with deal sourcing, negotiations, due diligence, deal closing, and post-deal integration.
  • M&A performance tracking including target data, deal progress, and issues, helps you improve many M&A pipeline management aspects.
  • Best M&A management practices include using lifecycle management software, making post-merger integration planning a part of M&A strategy, and working on a value creation plan in advance.
  • A company achieves better results when using a secure data room as a preferred storage tool and tracking deal progress with M&A pipeline templates.


Ronald Hernandez

Founder, CEO at

Data room selection & optimization expert with 10+ years of helping companies collaborate more securely on sensitive documents.

Recommended for you

We use cookies on our website to ensure the best user experience. By clicking "Agree" you are letting us use cookies according to our cookie policy. Learn more