M&A is an effective method to help companies grow. However, the acquisition process is full of potential pitfalls which can cause acquired companies to lose value. Making sure you follow these four steps for an effective acquisition will help you avoid common pitfalls and make your next acquisition a successful strategy to increase growth.
1. Make sure you plan your purchases.
Inadequate planning is among the main reasons behind failed acquisitions. By creating an acquisition plan from the beginning, you will make sure that your business is maximizing its value and is on the right path with your M&A goals.
This is done by creating a list of M&A targets, and then narrowing the list by using search criteria. These factors may include sector of the industry, deal value, market share, and operational scale. Corporate development teams can make use of a variety dataroomplace.blog of resources to identify M&A companies that are worth considering, such as online sources such as DealRoom and LinkedIn trade journals and industry associations, as well as databases of investment firms as well as private equity companies.
2. Create a team to oversee the M&A process.
It is vital that management teams establish the team under the direction of an executive at the top who can oversee the M&A from beginning to end. This is crucial to ensure the strategic intent behind the acquisition does not disappear and that the integration process is smooth. It is also crucial to have human capital experts on the M&A team to estimate the cost of benefits and compensation, and also quantify the actuarial estimations of pension and other financial liabilities.
