M&A is a powerful way for companies to grow. The process of buying a business is rife with potential pitfalls that can cause acquired businesses to lose their value. If you take the time to follow these four steps for an acquisition that succeeds can help you avoid common mistakes and make your next acquisition a winning strategy to increase growth.
1. Create a plan for acquisition.
Inadequate planning is among the main reasons for failed acquisitions. By establishing an acquisition strategy from the beginning, you will make sure that your business is maximizing its potential and staying on the right track with your M&A goals.
This is done by creating a list of M&A targets and then narrowing the list using search criteria. These could include factors like industry sector, deal size market share, and operational scale. Corporate development teams can make use of various sources to find M&A target companies, including online sources like DealRoom and LinkedIn trade journals, industry associations and databases of investment firms and private equity companies.
2. Form a team to manage the M&A Process.
It is crucial that management teams form teams that are led by an executive at the top who can supervise the M&A from start to finish. This is critical to ensure that the strategic intent of the acquisition doesn’t get lost in the process and that the integration process is smooth and efficient. It’s also important to have human capital experts on the M&A team to estimate compensation and benefits expenses, as well as quantify the actuarial value of pensions and other financial obligations.
click for info about document management unleashed virtual data rooms decoded
