Managing a merger or acquisition is potentially one of the most stressful experiences in business. The process of combining two different companies comes with a whole host of challenges across everything from development to HR, to sales and marketing. Coming up with a detailed strategy is undoubtedly essential for a successful merger, but there are often vital steps that are forgotten.
With this in mind, we’ve put together a short guide featuring the most important steps for preparing for and carrying out a smooth m&a process.
Finding the Best Deal
Before you begin looking for a company to acquire or merge with, you’ll first need to determine exactly what your objectives and goals are. For example, are you aiming to gain a bigger share of the market, or break into a new one? Is the goal to get rid of a competitor, or just to gain new products and/or intellectual property?
Once you can answer these questions and have a clear idea of your goals, it’s time to start looking for a deal that represents the best fit. Clearly, you’re more likely to find exactly what you’re looking for if you have a bigger array of opportunities to choose from, so it’s a good idea to spread the word about your plans – have professionals such as your solicitor, accountant, and in-house team keeping an eye out for you; the best deals are usually found through word of mouth.
Due Diligence Checks
One crucial step that should never be ignored is performing a thorough background check on any company you’re considering purchasing or merging with, in order to ensure there are no red flags and that the information you’ve been given is accurate. This will usually include the following elements:
- Financials – How is the company currently performing? What are its profit margins? Has revenue increased or decreased? Have its financial reports been submitted on time?
- Technology – How up to date is the company’s stack? What patents does the business, owner? Does it have any trademarks or intellectual property, and are these adequately protected?
- Customers – Who are the company’s top buyers? Is the business seasonal? What kind of reputation does the company have? Will you have any problems holding onto the company’s customers after the deal?
- Compliance – What laws and regulations is the company subject to, and how thoroughly have they complied thus far?
While this can be a time-consuming process, it is imperative to ensuring your own company is as protected as possible. Using a business intelligence platform such as Global Database is often a good place to start; much of the data needed is compiled in one place, with insights like turnover, cash flow, credit scores, technologies used, number of employees, mortgages and charges, employee details such as name, job title, seniority, and age and group structure and ownership.
This information can be used to help gain a detailed overview of each company, and with millions of businesses across 195 countries and every industry, you’re sure to find the information you need, whether you’re looking to buy a business in the USA paper industry or merge with a company.
Choose a Leader
Before the strategy for the process is established, it’s a good idea to identify one person who will be responsible for overseeing everything. This could be someone from either of the two companies or an independent professional who is brought in in order to ensure that everything goes to plan.
This will make it easier for employees from both companies to know who is running the process, and in the case of an independent professional, it eliminates any accusations of bias between the companies. Having a singular voice to oversee the project makes things more efficient and everyone will know who is in charge.
Keep Staff Informed
When everyone in each company learns of the deal, there is justifiably a lot of concern over who might lose their jobs, and what the merger might mean for their current role and responsibilities. Rumours quickly spread, and employees start to view each other with suspicion, in particular, their counterparts from the other company.
In order to prevent the spread of potentially damaging misinformation and stop the workplace becoming toxic during the merger process, it’s important to keep staff at all levels as informed as possible at every step in the process. It’s important that nobody feels left out of the loop; hold meetings with all individuals and send emails to everyone cc’d in.
One of the biggest, yet often unforeseen, challenges in any M&A process is preparing for a potential clash of workplace cultures between the two companies. Any working environment will have developed its own unwritten rules for what is and isn’t acceptable, along with traditions for things like birthdays and holidays. It’s vital that you take these differences on board as early as possible and look at ways of combining the cultures to keep staff happy and motivated.
Evaluate the Process
After the integration process is complete, it’s extremely important to dedicate some time to thoroughly review it. Even if you have no short-term plans to repeat the process, you never know what might happen in the future, and having a better understanding of what works will make it that much more efficient.
Determine what went to plan and what didn’t, and identify any aspects that would need to be handled differently in another deal. Make sure you keep records of the professionals that were involved and the overall strategy used.
Any M&A deal is going to throw up its fair share of stress; it’s almost a given considering it’s one of the biggest decisions and subsequent projects any company can take on. Obviously, it’s impossible to predict every potential issue that might arise, but by doing your homework and having a detailed plan in place overseen by the right professionals, you’re sure to make the process run much more smoothly.
Contributed by www.GlobalDatabase.com