4 Signs of a Strong Merger & Acquisition
A merger and acquisition can be a smart strategic move for companies with plenty of economic prospects. That said, some M&A transactions are stronger than others. The following signs can help you predict whether your company can survive a merger and acquisition—and whether it will pay off.
1) Thorough initial assessments
Long before the integration process actually happens, a successful M&A starts with an assessment of your own financial status. Whether you want to focus on profits and losses or liquidity, determine whether your company is financially healthy enough to make and maintain an investment. You should also try to estimate the cost of integration from an organizational standpoint. What will it take to blend employees, cultures, and systems from two separate entities?
2) Accurate predictions and due diligence
M&As are not just about numbers; the people involved can make or break a transaction. For starters, does your team have the experience to make projections about the proposed new company? Have you analyzed the financial, organizational, and legal elements of the integration? When you expect a certain degree of value from a deal, you need to be sure that it can actually be delivered. Your team should be equipped to predict the financial benefits and solve any potential challenges. If they aren’t, you should consider asking a specialist to ensure you allocate the right budget, price the deal appropriately, and make accurate predictions.
3) Strong leadership
Because M&As don’t happen overnight, you should organize a transition team to help the integration run smoothly. These experts should understand the strategic vision that is driving the transaction forward. Make sure your team has a well-defined plan and clear decision-making authority. Don’t forget to include key management people within both companies to make sure you maximize the available knowledge. You also have a responsibility to your other employees, keeping in mind the importance of communication, compliance with employment laws, and respect for their individual concerns.
4) Well-planned and monitored integration
When the time comes to merge the two companies, make sure you are consistently evaluating and re-evaluating the situation in terms of organization, finances, and culture. Your appointed teams should be flexible, updating their plans to reflect changes while maintaining a strong commitment to the original vision of the deal. You may have signed the deal, but that doesn’t mean it’s done and dusted. Some say the first 12 to 18 months of a merger are crucial in establishing the future successes and failures of the new organization. Keep an eye on everything, from the smallest details to the big picture, and set milestones to ensure the transition is made quickly and efficiently.
When you’re entering into an M&A transaction, the level of expertise on your team can make all the difference. Legal matters are no different. The attorneys and business advisers at Maxwell Dunn will be instrumental in planning your next business transaction. Call us to gain the advantage that matters for your next deal.