Mergers & Acquisitions - 4 Keys to Success  

10th October 2008

There are many reasons why mergers and acquisitions fail, but there are also many reasons why they can succeed and be very successful.
It’s a big topic and I certainly can’t do it justice here, but many business owners consider it at some point. Because of that I’ve decided to provide the keys to success in confidently approaching an opportunity to merge or acquire. I’ll delve further into this topic in future issues, but for now, here are the four keys:
1. Clear Strategic Direction
  • Is there a strategic fit between the businesses?
  • If you don’t have a vision and clear strategic direction for your own business, how can you assess if someone else’s is a good fit?
  • Research and screening is absolutely essential
  • Are you clear on why? What are the benefits to be gained:
    • Scale
    • Access to new geographic markets
    • Access to a new client base
    • Access to new methodologies/products/technologies
    • Access to new market segments
    • Acquire new skill sets & expertise
    • Etc
2. Comprehensive Due Diligence
  • This is the process you have to go through before you make the final decision or offer to merge/acquire – this is the ‘show and tell’ part of the process
  • If you don’t do it thoroughly, or know what to look for, you can end up with an altogether different company than you first thought
  • Financial and legal aspects are always top priority in most due diligence. Obviously accountants, financial advisors and lawyers are essential.
  • Many business owners place less reliance on the other aspects of DD – in my experience it’s because they don’t know how to approach it and may not have access to the resources to guide them through it, but don’t just look at the numbers. Business advisors and consultants are essential objective advisors for this part of the process.
  • Due diligence must also cover other aspects of the business such as sales forecasts, market positioning, product/service development, culture and human capital.
3. Integration Planning
  • This is critical and also often overlooked.
  • The purpose of an Integration Plan is to answer the question “What happens after the deal is signed?” As soon as the papers are signed, what is the very next thing to happen – a schedule of planned steps needs to snap into action.
4. Post Acquisition Review
  • Has it been successful?
  • Are we experiencing the gains we were expecting?
  • What needs adjustment?
  • Have the cultures melded? If not, what do we need to do to move forward more cohesively?
  • How do we take this to the next stage?
  • Will we do it again – the same process or differently?
If you get these 4 keys right, you’ll make sound business decisions on merging or acquiring.
 
© 2008 BOSS Management Group Pty Ltd. All Rights Reserved.
 
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Jenny Stilwell is the Managing Director of BOSS Management Group and provides advice on strategy, structure and people development for professional, lifestyle oriented business owners wanting to confidently increase the value of their service business, ultimately spending less time in it.
 
Her free Ezine publication BOSSMENTOR® Business delivers proven strategies, tips and resources designed to help you achieve success.