There’s no denying that M&A is a successful method for businesses of all sizes around the world to accelerate their growth. However, the process is full of potential pitfalls which can cause acquired companies to lose value. If you take the time to follow these four steps to an effective acquisition will help you avoid common pitfalls and ultimately make your next acquisition a winning strategy for growth.
1. Plan your purchases.
Poor planning is one of the primary reasons for failing acquisitions. If you create an acquisition plan from the beginning, you will ensure your company is maximizing its value and remains on the right path with your M&A goals.
This involves creating a list 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 have access to a variety of resources to identify M&A potential companies, which include online sources like DealRoom and LinkedIn trade journals as well as industry associations and databases of investment firms and private equity companies.
2. Create a team to oversee the M&A process.
It’s important for management teams to establish an executive team headed by a senior executive that can supervise the M&A process from start to the end. This is essential to ensure the strategic intent behind the acquisition doesn’t get lost, and that the integration process is smooth. It is also vital to have human capital experts on the M&A team to estimate the cost of benefits and http://dataroomplace.blog/top-10-finance-bloggers compensation, and also quantify actuarial estimates of pension and other financial obligations.