M&A is a powerful way for businesses to grow. The acquisition process is fraught with potential pitfalls that could lead to acquired businesses losing their value. Following these four steps can help you avoid common pitfalls of acquisition, and make your next acquisition an efficient strategy for growth.
1. Create an acquisition plan.
Inadequate planning is among the primary reasons for failing acquisitions. If you create an acquisition plan from the beginning, you will ensure that your company is maximizing its value and is on the right path with your M&A goals.
This involves preparing a list of M&A targets, and then narrowing the list by using search criteria. These factors may include industry sector size, deal value, market share and operational scale. Corporate development teams can use diverse resources to pinpoint http://dataroomplace.blog M&A targets, including online sources such as DealRoom and LinkedIn trade journals, trade magazines and industry associations, as well as the databases of investment banks and private equity companies.
2. Create a team who will be in charge of the M&A Process.
It is crucial that management teams set up teams that are led by an executive in the top position who will oversee the M&A from start to finish. This is crucial to ensure the strategic intent behind the acquisition does not get lost, and that the integration process runs smoothly. It’s also important to have human capital experts on the M&A team to calculate the cost of benefits and compensation, and to quantify the actuarial value of pensions and other financial obligations.
