An increasing number of companies are engaging in M&A as part of their growth strategies to acquire new products, expand into new geographical areas or have access to new customers. If yours is one of them, here are some key insights and factors to keep in mind before making the move.
Level-headedness Wins the Deal
As with most major transactions in life and in business, the M&A process can be a whirlwind of anxiety and excitement. Getting the deal done on the terms you want requires knowing what your business and the competition's business are worth, and then negotiating accordingly. As usual, business acumen trumps emotions.
Don't Let Chaos Overtake the Takeover
Once the deal is done, don't get caught up in the flurry of the moment. A proper audit of both companies is an important first step. You need to pause, get your bearings and have a good picture of the present situation before forging ahead. It's only after you've done a thorough job assessing the landscape (people, products, ways of working, technology) that you'll know which path is the right one to take.
Integration is Bigger than IT
When it comes to the integration process, most people think of technology infrastructure first. Indeed, it's a big part of the equation. However, the people from both companies are really the most important assets. Bringing them together and creating a new, unified culture can make or break your future success. In fact, according to research by management consulting firm Aon Hewitt, cultural integration issues are the second-most common direct reason cited for M&A deals falling short of objectives. Getting everyone on the same page is just as important as aligning the rest of your business.
Keep Everyone's Eyes on the Business Goals
Combining two companies can be a complicated endeavor. But there is something behind it all: your business goals. Set them, so you can achieve them. Communicate them, so everyone can work together to achieve and celebrate them. It's as simple as that.
Get Back to Business
It's easy to get too wrapped up in the integration process. Don't forget what made your business so successful that you were able to take on a merger or acquisition in the first place.
Working with qualified advisors who know the M&A process can give you an edge when it comes to making a deal and making that deal a success. Your Rabobank Relationship Manager is here to help if you’re considering a merger or acquisition, or want to have an initial discussion about the possibilities.
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- "5 Tips for a Successful Merger," Martin Davis, BAI, Dec. 13, 2010, http://www.bai.org/bankingstrategies/strategy/mergers-and-acquisitions/five-tips-for-a-successful-merger, accessed March 31, 2014
- "Mergers & Acquisitions for Dummies," Bill Snow, Mergers and Acquisitions for Dummies, http://www.dummies.com/how-to/content/mergers-acquisitions-for-dummies.html, accessed March 31, 2014
- "Is It Too Soon to Call 2014 a Year of Mergers and Acquisitions?" Kapitall, The Street, Feb. 19, 2014, http://www.thestreet.com/story/12414132/1/is-it-too-soon-to-call-2014-a-year-of-mergers-and-acquisitions.html, accessed March 31, 2014
- "2014 CFO Outlook," Bank of America Merrill Lynch, CFO Outlook, http://corp.bankofamerica.com/business/ci/landing/cfo-outlook?cm_mmc=gcb-general-_-vanity-_-ja01vn0014_cfooutlook-_-na, accessed April 23, 2014
The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.