There’s no denying that M&A is a great way for companies of all sizes around the globe to accelerate their growth. The process of acquiring a business is fraught with potential pitfalls which can cause businesses acquired to lose their value. Taking time to follow these four steps for a successful acquisition can help you avoid common pitfalls and ultimately make your next acquisition a successful strategy to increase growth.
1. Plan your acquisitions.
Poor planning is one of the most common reasons for failure in acquisitions. If you develop an acquisition strategy at the outset, you can ensure that your business is maximizing value and staying in line with the goals of your M&A strategy.
This is done by creating a list of M&A goals and then reducing the list using search criteria. These factors may include industry sector valuation, deal value, market share and operational scale. Corporate development teams can use various sources to identify M&A companies to target, including online sources such as DealRoom and LinkedIn trade journals as well as industry associations and databases of investment firms and private equity companies.
2. Create a team who will be in charge of the M&A Process.
It’s important that management teams establish an organization headed by a top executive who is able to supervise the M&A process from beginning to finish. This is essential to ensure that the purpose behind the acquisition doesn’t get lost, and that the integration process goes without a hitch. It is also essential to have experts in human resource on the M&A teams to assess benefits and compensation costs and quantify actuarial estimates of financial liabilities and pensions.
