Mergers and acquisitions are commonplace in any industry, with companies often integrating themselves with complimenting or competing businesses. Statistics show that close to 348 M&A deals were executed in the year 2019, valued between $25 and $49.9 million. Although the year 2020 will see fewer deals because of the COVID-19 situation, integrations continue to be one of the most important strategies for future growth and expansion. If you’ve been contemplating a deal, following tried and tested approaches will ensure a successful company merger. Here are some valuable tips to help you get started.
1. Assess the Liquidity and Financial Status of Your Business
An M&A deal is a financial transaction where you’ll integrate your company with another company. Such executions need stability with substantial liquidity to carry the costs. Before finalizing your decision, check the profit and loss statements and balance sheets of your own company and the targeted business. Ensure that you have adequate capital and equity to fund the transaction so that the new entrant is seamlessly integrated into your company.
2. Make Sure the Stakeholders are On Board
A critical factor essential for a successful company merger is the support of all the stakeholders. Communicate the impact of the M&A deal and the best approaches you’ll use to minimize costs and optimize benefits. The key stakeholders include investors, customers, vendors, and any other businesses you rely on to support the day-to-day running of company operations. Open channels of communication are essential to eliminate any uncertainty about the outcomes of the merger.
3. Have Expert Teams Working on the Process
Include top-ranking personnel in the discussions, including the president, CEO, and representatives of different departments from both businesses. You’ll need internal and external teams working together for the successful culmination of the deal. For instance, investment bankers, lawyers, accountants, insurers, and valuation experts who’ll assist with their expertise. Set stages for the completion of the process and deadlines in increments of 30/60/90/120 days. Expect reports and accountability for each segment of the M&A.
4. Welcome Feedback
Rely on feedback from employees, customers, and any other entities directly affected by the M&A deal. Use the information you receive to make changes in the strategies and tweak them as you go along. Conduct meetings regularly where you can talk about quantifiable progress and how the next steps will be executed. Focusing on the amalgamation of company cultures and work ethos is critical as is customer service and attempts to maintain stability in regular functioning. For instance, delivering products and services on schedule is essential to minimize inconvenience to clients.
With careful, in-depth planning of each stage, you’ll execute a successful company merger. Unexpected delays and setbacks are a real possibility. You might even find that you need to invest more funds and resources than you estimated at the onset. But, with perseverance and determination, you can complete the M&A deal and ensure the future growth of the business.