Tips for Successful Mergers and Acquisitions
Mergers and acquisitions can be a great way to grow your company or expand into a new market, but these deals are not without risks.
Here are a few tips to put into practice if you are considering buying or selling a company:
Develop a Method for Sourcing Deals
Buyers want to find potential acquisitions that meet their criteria. Sellers want to deal with serious buyers with the resources to close a deal. Few buyers have the resources to go hunting for potential acquisition targets, and even fewer sellers have the time or ability to approach potential buyers on their own. As a result, using trusted intermediaries is a must. For larger deals, an investment bank will introduce potential buyers and sellers to one another. For mid-size to smaller deals, other types of trusted intermediaries can help bring the parties together (business brokers, attorneys, accountants, business associates, etc.).
Perform Detailed Financial Analysis
You should carefully consider the financial statements of the potential target company so that you may determine where the potential risks lie. Detailed financial analysis will involve examining the target company’s financial statements, valuation and underlying assumptions, and important financial ratios, as well as the relevant market.
Make your Intentions Clear from the Beginning
The deal will work very nicely if each party knows what the opposite party is looking for. Important stakeholders, such as major customers and shareholders and financing sources, should be on board with the strategy as well.
Be Sure about Your Cultural Fit
It is essential to assess if the separate cultures of each company will merge. The cultures of both the companies may make or break a deal. Managers may feel that their autonomy is being lost which may be a shock. Determine who will be running the post-transaction company, from the CEO down to each managerial position. Companies with happy employees who have a feeling of belongingness are more successful.
If Necessary, Just Walk Away
It is better to walk away from a bad deal. If the other side’s terms don’t match your expectations and you’re unable to bring them around to your viewpoint, don’t hesitate to walk away. Never feel that you absolutely have to do a deal.
Acquire Capable Legal Counsel
Lawyers will be necessary to document the deal and engage in due diligence and can also be helpful during negotiations. A lawyer with experience in mergers and acquisitions can point out potential obstacles, suggest solutions, and show you things from a different viewpoint.
A merger or acquisition is not easy. Set deadlines and goals that you can reach as it will help the team to keep track of the progress of the deal as well as continue along with a purpose. If the process bogs down, that may be a sign that the deal is not meant to be.
Hire Experts for Assistance in the Post-Merger Process
It may be necessary to hire experts to successfully integrate the acquired company’s assets. This could include information technology or information security professionals to successfully integrate different hardware or operating systems, or human resources managers to review various employment protocols. Experts will educate the team and ensure that problems are avoided.
Put in Efforts to Listen
Dedicate efforts and time to listen actively to the concerns of personnel of both the acquirer and the target both pre-acquisition (where possible) and post-acquisition in order to make healthy relationships as you move forward. Issues must be dealt with effectively and as early as possible.
Make an Integration Process That Is Repeatable
After completion of the deal, review the process and make any necessary adjustments. This will make future deals easier. This is especially important for serial acquirers or companies involved in a roll-up strategy.
Is your company needing legal assistance in a merger or acquisition transaction? If so, contact Whitley LLP Attorneys at Law today. We have extensive experience in both public and private company mergers and acquisitions.