It’s not a secret that M&A is a great way for businesses of all sizes across the globe to accelerate their growth. The acquisition process is fraught with potential pitfalls that could cause businesses acquired to lose their value. By following these four steps, you can help you avoid common mistakes in acquisitions and make your next purchase an effective strategy to grow.
1. Plan your acquisitions.
One of the most frequent reasons for unsuccessful acquisitions is poor planning. By developing an acquisition plan from the beginning you can be sure that your company is maximizing the value of its acquisition and keeping in line with the objectives of your M&A strategy.
This involves creating a list M&A targets, and then narrowing the list using search criteria. These may include sector of the industry valuation, deal value, market share and operational scale. Corporate development teams can leverage various resources to identify M&A potential targets, including online sources like DealRoom and LinkedIn trade publications, trade journals, industry associations, as well as databases of investment banks and private equity companies.
2. Form a team to manage the M&A process.
It’s important that management teams establish the team that is led by a senior executive who is able to oversee the M&A process from start to the end. This is critical to ensure that the strategic intent of the acquisition isn’t lost in the process and that the integration process runs smoothly. It’s also important to have human capital experts on the M&A team to calculate the cost of benefits and compensation, as well as quantify actuarial estimates of pension and other financial obligations.
