It’s not difficult to see that M&A is a great way for businesses of all sizes across the world to accelerate their growth. The process of acquiring a business is fraught with potential pitfalls that can result in 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 main reasons behind failed acquisitions. By creating an acquisition strategy from the beginning, you will make sure that your business is maximizing its value and staying on the right path with your M&A goals.
Typically, this involves creating a list of M&A companies to target and then narrowing that list through the use of search criteria. This could include factors such as industry sector size, deal size market share, deal size and operational scale. Corporate development teams can utilize numerous resources to find M&A companies to target, including online sources like DealRoom and LinkedIn trade publications and industry associations, as well as databases of investment firms as well as private equity companies.
2. Create a team to oversee the M&A process.
It is important that management teams create teams that are led by an executive at the top who can supervise the M&A from beginning to end. This is essential to ensure the strategic intent behind the acquisition doesn’t disappear and that the integration process goes smoothly. It is also crucial to have experts in human resources on the M&A teams to assess benefits and compensation costs and quantify actuarial estimates of financial and pension liabilities.