Successful mergers and acquisitions (M&As) can help companies enhance revenue, enjoy cost savings, serve new markets, and much more. While it may seem like an exciting prospect for your business, there’s always the chance your M&A could fail to deliver on its purpose. If you’re considering an M&A, you need to look at the facts well in advance. These tips are designed to help you think about your potential deal, its profits and pitfalls before you get started.
- Due-Diligence, Due-Diligence, Due-Diligence—and Do It Early
When it comes to M&As, it’s never too early to do your homework. Your due diligence should begin right from the outset, not when the deal is about to be made or announced. Does the deal make financial sense? What do you know about the other company’s track record or reputation? You should form a solid foundation of knowledge to work from before you move forward. Thorough research should minimize any surprises you encounter along the way.
- Understand the goals of each company
Beyond the specifics of the deal itself, you should understand what each company is getting out of it. What are the characteristics of the companies involved? What does each company hope to achieve in the process? Understanding this early will help you plan and ensure that your strategies are compatible.
- Get to know the seller or buyer
When you get to know the people behind the deal, it will inform your decisions going forward. It will give you an idea of your eventual integration plan and help you negotiate with the seller or buyer. Furthermore, getting a sense of the other company’s corporate culture can help you envision the outcome of your M&A once it is complete. At the end of the day, real people are making this deal happen, and you want to make sure you all share a similar vision.
- Determine the value drivers
Part of the due diligence process involves pinpointing the sources of value you can gain from the deal. Does your potential M&A involve people, intellectual property, or a brand that can generate value? How can you structure the deal and use resources to maximize these value drivers? Make an initial assessment well in advance to gain some insight into the potential financial benefits and learn whether they justify the value.
- Envision your integration plan
Early integration planning is essential to a successful M&A, but it doesn’t hurt to envision your plan before you enter into a deal. Ask yourself who you would include on your integration team and how both companies would integrate products and technology, information systems, corporate culture, operations, and employee benefits. Does it make sense at first glance? You may find that the deal involves more trouble than it’s worth or, conversely, that your improved ability to integrate will make it even easier to realize the financial benefits you expect.
Before you undertake the challenge of an M&A, you should enlist the help of a skilled business attorney. They can help you evaluate the deal and root out any potential problems. Contact Integrated General Counsel to schedule an appointment and learn more about the value you can gain from a knowledgeable business attorney.
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