Top 15 Types Strategies for a Successful Acquisition
Technology companies ?are more likely than going public to be acquired, but not enough attention is given to making these acquisitions profitable for the target and the buyer.
The first half of 2021 saw Asian merger and acquisition activity rise to their second-highest ever level, totalling US$707.7 trillion. This is a 75% increase over the previous year.
Despite the huge amount of money spent on acquisitions, not all M&A deals are successful. A recent Australian study found that 60% of M&A deals between public companies fail.
More than 30 corporate acquisitions have been completed on both sides. These are my top, most valuable, and hard-earned lessons that will ensure successful acquisitions.
Stay crystal clear
It is essential that the acquirer clearly explains how they plan to create value through the acquisition. Many times, the strategic logic of acquisition is unclear or different stakeholders have divergent visions. Deals that lack a clear strategy to create value are less likely to succeed.
Do not look for savings, but revenue
Too much attention is paid to cost reductions by acquirers, and not enough on revenue synergies. Revenue synergies can have huge upside depending on the case. However, it may take focused effort to achieve them.
You can tap on the boosting effect
The merger of Juwai Limited with IQI Global, which created Juwai IQI, had a transformative effect. The merger resulted in most revenue drivers doubling or tripling their value. Do not underestimate the impact a merger has on customers, staff, and other stakeholders.
One bad business can’t save another
In the hope that they can do better together, some executives try to merge two businesses with poor performance. They won’t. You can make the situation worse by combining two poor companies.
Combining two?print businesses , for example, has not been able to stop this sector’s ongoing implosion in profitability.
Acquisition is only the beginning
Although it can take several months to complete an acquisition, merger, or sale, this is only the beginning of combining the businesses. Take a look at what happens when you purchase a?software program . After you have paid the licensing fee and negotiated the price, the hard work begins.
The licensing fee can often be overlooked by integration costs, which can run up to five to ten times the license fee and require the constant attention of large teams.
You will need to put in additional effort and time after a merger or acquisition. To ensure successful integration, you might consider sending dedicated teams to post-merger sites.
The roadmap is far more important than the advisors
Your M&A advisors and lawyers may cost you hundreds of thousands or even millions of dollars. Your acquisition could still go wrong. Your roadmap is just as important as the advisors.
It must be understood by all key players and agreed upon by them. Your strategy is far more important than the advice you receive.
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One bad business can’t save another
In the hope that they can do better together, some executives try to merge two businesses with poor performance. They won’t. You can make the situation worse by combining two poor companies.
Combining two print businesses, for example, has not been able to stop this sector’s ongoing implosion in profitability.
Acquisition is only the beginning
Although it can take several months to complete an acquisition, merger, or sale, this is only the beginning of combining the businesses. Take a look at what happens when you purchase a?software program . After you have paid the licensing fee and negotiated the price, the hard work begins.
The licensing fee can often be overlooked by integration costs, which can run up to five to ten times the license fee and require the constant attention of large teams.
You will need to put in additional effort and time after a merger or acquisition. To ensure successful integration, you might consider sending dedicated teams to post-merger sites.
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The roadmap is far more important than the advisors
Your M&A advisors and lawyers may cost you hundreds of thousands or even millions of dollars. Your acquisition could still go wrong.
Your roadmap is just as important as the advisors. It must be understood by all key players and agreed upon by them. Your strategy is far more important than the advice you receive.
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Determine what your real assets are
To maximize the benefits of your acquisition strategy, due diligence, and post-acquisition implementation, you must all plan. You must be clear about what you are buying and how you will protect its value. This knowledge must guide your roadmap.
Not delegating
The hard work involved in M&A cannot be delegated. This task is for the CEO, Executive Chair, and Managing Director.
This task cannot be left to lower-level managers or external advisors. Extensive integrations can be made or broken by the senior?management team .
Do not overestimate the purchase price
You risk alienating key people or the founders of the target if you insist on a high purchase price.
The M&A’s potential benefits could be undone by losing key members of the team or a substantial sell-off in shares following completion. This could affect the logic of the acquisition and investor confidence as well as the share price.
A clear DD plan
Set precise levels of materiality as the first step in your due diligence. Decide the importance of particular factors and assumptions to the purchase. This clear ranking of priorities will help you sort through the vast amount of information that is likely to be available in the?data room .
Focus on the lawyers
Your advisers may be genuine in their desire to help you make the best decisions. However, they have a financial interest to spend as much time as possible on your account. Your lawyers should keep their eyes on the goal of avoiding costly mistakes.
It’s more than just numbers
Even though the numbers might add up, it may still be a bad idea to acquire. Be aware of irreconcilable differences between culture and staff norms. Many buyers believe they can resolve these issues once the acquisition is completed, but then find their efforts unsuccessful.
Keep your eyes peeled
Remote acquisitions can be very difficult. It is best to visit the target. You can locate the functions of the new combined business within the target to improve integration.
To communicate to the target that integration will not be the target’s responsibility, it is important to bring together all the teams in one workspace.
It all starts at the top
Avoid a confrontational approach to M&A. Do everything you can to ensure that everyone in the business has a common culture and points of view after completion.
The battle of “us against them” begins at the top. Mid-level executives will learn from senior staff how to treat their new colleagues. You can set a good example and work hard to bring together the combined leadership team.
Buy or make?
Always do a thorough “make or purchase” analysis before you invest in technology. Many leaders underestimate the difficulty in?building technology ?and underestimate its ability to be acquired.
You may need to adjust your expectations based on what you know about the difficulty of M&A. These tips will help you ensure that any M&A is successful.