Plan and execute successful mergers and acquisitions

The lifecycle of mergers and acquisitions and outline the steps you need to take in order to be successful

1). Strategy

Strategic planning helps protect you from M&A failures. Just because you want to buy a company doesn’t mean you should buy that company. There are several questions you should ask yourself when researching target companies.

• Why do you want to acquire, or merge with, another company?
• What is your business objective?
• Do the target company’s products or services fit with your objectives?
• What value will the deal bring you?
• What is the value of the target company?
• Does the company culture fit with your company?

These types of questions can help you narrow your choices as you screen the companies you are interested in, determine target company valuations, structure deals, and analyze how your business decisions will give you an advantage in the current market.

2). Importance of synergy

Synergy is a combined action or operation. Many companies decide to merge with or acquire another business based on potential synergies that can come from combining similar products and technologies. The following are some benefits that synergy can bring when companies merge:

• Combine workforces—Identify and eliminate redundancies and restructure workflows to increase efficiency and to accommodate increased business volume.
• Combine technologies—Combining similar technologies can help a company to achieve strategic advantages in your market.
• Reduce costs—Consolidation can improve your purchasing power and decrease costs as you negotiate better terms with vendors based on the need for more materials because of increased output.
• Market expansion—There is potential that combining companies will create an advantage in a particular market, or enter into a market that was not previously available to you.

3). Execution

During this phase, you’ll want to gather experts and people with M&A experience. You need people who are expert advisors in HR, IT, operations, legal, taxes, and finances to help you cover all your bases and to help the transition run smoothly.

All of this experience, expertise, and knowledge come together to ensure that closing the deal will continue to meet the goals and objectives you established during the strategy stage.

4). Integration

Integration brings another set of challenges because now two companies with two cultures need to figure out how best to work together.

You will need to put together an integration team to help the integration run smoothly. Members of this team should include:

• Senior executives to keep stakeholders informed about merger progress, to communicate the value of the merger, and to ease concerns about the company’s future.
• Due diligence team to retain important information. The due diligence team works with the integration team to ensure that all data is successfully transferred, that there are no redundancies, and that no information is lost.
• Human resources to communicate with and answer questions from employees about job positions, benefits, roles, and expectations going forward.?
• Change management experts to help the purchased company feel cared for, to drive employee morale, and to help employees and stakeholders buy in to the idea of being acquired. Change management experts can help to avoid problems.

Consider using existing org charts and drawing new charts as needed during the integration phase. Org charts can give you valuable information like where people are physically located, what teams they are assigned to, their specific roles and responsibilities, and who reports to whom. This information?can give you insight as you plan for restructuring organizations, departments, and business units. It can also help you understand the human capital of the organization that was just purchased.?

The M&A process doesn’t happen overnight or even in a couple of weeks. It is a long, complex, and detailed process that requires patience, diplomacy, compassion, and compromise. The steps and best practices we’ve outlined can help you to remain focused, pay attention to detail, and get the deal done right.

For strategic Mergers and Acquisition deals Reach out to CA Neetu Jain