There’s no denying that M&A is an effective way for companies of all sizes across the world to speed up their growth. The process of acquiring a business is fraught by potential pitfalls, which could result in acquired businesses losing their value. The following four steps can help you avoid common mistakes in acquisitions and make your next acquisition an efficient strategy to grow.
1. Create an acquisition plan.
One of the main causes of failed acquisitions is inadequate planning. If you develop an acquisition strategy prior to the start of your acquisition you can be sure that your business is maximizing the value of its acquisition and keeping in go now line with the goals of your M&A strategy.
Typically, this involves making a list of M&A target companies and then narrowing the list with the use of search criteria. These factors may include industry sector, deal value, market share and operational scale. Corporate development teams can use numerous resources to find M&A targets, including online sources like DealRoom and LinkedIn trade journals, trade publications and industry associations, and databases of investment banks and private equity companies.
2. Create a team that will be in charge of the M&A Process.
It’s crucial for management teams to establish an executive team headed by a top executive who can oversee the M&A process from start to completion. This is essential to ensure that the goal of the acquisition won’t be lost along the way and that the integration process runs smoothly. It is also essential to have human resources experts on the M&A teams to calculate the cost of compensation and benefits and estimate actuarial estimates for financial and pension liabilities.
