Four Steps for a Successful Acquisition
M&A is a great way for businesses to grow. However, the process of acquiring is prone to pitfalls which can cause acquired companies to lose value. If you take the time to follow these four steps to a successful acquisition can help you avoid common pitfalls and make your next acquisition a successful strategy to grow.
1. Develop an acquisition plan.
Inadequate planning is among the primary reasons for failing acquisitions. By creating an acquisition plan from the beginning, you will ensure your company is maximizing its value and is on the right path to achieve your M&A goals.
This involves preparing a list of M&A targets and then narrowing the list using search criteria. These could include factors like the industry sector size, deal size market share, and operational scale. Corporate development teams can rely on numerous resources to find M&A potential targets, such as online sources such as DealRoom and LinkedIn trade journals, trade publications and industry associations, and databases of investment banks as well as private equity firms.
2. Set up a team that will manage the M&A process.
It’s crucial that management teams establish an organization headed by a senior executive that will supervise the M&A process from beginning to completion. This is essential to ensure that the purpose of the acquisition is not lost in the process and that the process of integration is seamless. It is also essential to have human resource experts on the M&A teams to determine the cost of benefits and compensation and quantify actuarial estimations of pension and financial liabilities.