Mergers and acquisitions often start with the best of intentions, whether the company owners are pursuing their exit strategy and want to sell, or a high-growth company is looking for an even bigger boost by joining forces with a company that has synergistic intellectual property, talent, or a hold on a particular geographic area. But not all deals can be used as examples of successful mergers and acquisitions. Here’s how to go into your next transactions with eyes wide open, to not only achieve your company’s latest strategic goal but to make it a successful one, from the day of the offer to a year after the integration and beyond.
How to Measure the Success of Mergers and Acquisitions
Before going into the transaction, you will want to lay out what your definition of success will be. Measures of M&A success can include revenue growth, client growth, and tangible exposure to new types of clients. It can also include an assessment of whether the company was able to hold onto key employees throughout the process, and was able to keep the core business running the entire time, without disruption.
M&A experts become valuable resources during this time, as they can share successful mergers and acquisitions examples and lessons learned so that you do not repeat mistakes that other companies have made. They can also fill in for the valuable members of your finance team who need to work on the details of the deal. And they can help by sharing strategies for successful mergers and acquisitions so that you can decide on the strategy that will best work for the size, complexity, maturity, and culture at your company.
How to Make Mergers and Acquisitions Successful
1.Be thorough in your search. The work begins with searching for potential acquirers or target companies. This is not the time to limit yourself to one scenario, as the search may reveal some surprising results and poke some holes in your assumptions. You’re looking for opportunities and, with some outside expertise, you should be able to find the right one.
2. Get to know each other, and prepare to be open with the other company. Once you find the right fit, maybe this is a temporary partnership—if you are taking over another company—or it’s the beginning of a long-term relationship. Either way, both companies will need to learn each other’s language and culture, while combining (or taking over) systems, people, roles, locations, and more.
“Due diligence” will be emphasized by the outside experts who help you with any M&A deal, but for various reasons, it’s not always carried out to its full extent, and target companies are not always prepared to share everything. If you’re being acquired, expect to share your historical financial statements, forecasts, and equity information, and more. By getting these indicators of your overall business performance in good shape ahead of time, your valuation should be closer to what you would hope it would be.
The courting phase of a merger or acquisition is not just about the transaction itself but what comes after—the ease and smoothness of the integration are often what will be looked upon to determine whether it was indeed a successful merger and acquisition.
3. Prepare, prepare, and prepare some more. We don’t usually like to repeat ourselves, but this is one of those times when it’s necessary. The timeline to transaction day will constantly be shrinking from here on out—but any prep work you can put into this will actually save you time in the long run and ensure you’re on track for becoming one of the successful mergers and acquisitions.
There are going to be issues that arise—whether it’s a company you’re acquiring getting cold feet, widespread economic issues that slow down M&A activity, or a financial problem that halts some progress on getting information. You want to have experts on your side who have significant experience, best practices, and successful mergers and acquisitions case studies to help guide you by helping you ask the right questions, assess the other company properly, and think through what you really want for this next iteration of your business.
4. Communicate openly and honestly with all stakeholders. The early days of a merger or acquisition can be incredibly delicate, and some do not make it to the finish line. For that reason, communication can be limited at the beginning of the process, but you do want to be prepared for when you can share the information widely, not only with employees but with your clients and prospects.
In addition to getting the basic communications in order—like the press release announcing the deal—you could also have correspondence ready for when you are ready to move forward with the news. There will be a lot of questions from all stakeholders, and you want to be prepared to answer them thoughtfully. Proactiveness with your communication strategy will be your friend here.
5. Spend time on the “after” version of your company. What’s going to happen after the ink dries on the deal? Some details—such as whether your company’s employees will need to change their email addresses—do not need to be tackled right away, but you may have to switch over to a new payroll system on day one, and you might have considerations to make ahead of time if some significant roles overlap. It can be difficult to think ahead while you are in the thick of negotiations, but finance and accounting pros who have been involved in or have observed both successful and unsuccessful integrations can be a great help here.
Keys to Successful Mergers and Acquisitions
For most companies, it’s an infrequent occurrence to take on a merger or acquisition. Very likely, few people on your team have experience to know what to expect and to ask the right questions. Successful mergers and acquisitions require a certain level of experience, from those who have gone through a similar process or have come in during the integration period to pick up the pieces. So, before you embark on an M&A deal, reach out to RoseRyan, and we can help you stay ahead of issues as you pursue a successful merger or acquisition.