According to most business experts, the executing of a thoroughly researched strategy can be the difference between failure and success, especially when it comes to mergers and acquisition.
With mergers and acquisition, a company not only eliminates its competition but it also reaches new markets and gain new customers. There are a lot many benefits that come from combining business interests and adapting a collaborative environment.
Although all this can only be achieved with a well panned, effective and a much focused strategy. So, if you are wondering how you can achieve all this, here are some of our top tips to successfully approach mergers and acquisition.
1: Ensure You Have Shared Goals
The very first step is to determine whether both the companies have shared business goals and objectives or not. Are there any things that you two may strongly disagree on? Do you two have different approaches while dealing in similar areas which could possibly case friction?
These are some of the many questions that your board of directors should pose from the initial discussion. This helps determine whether the merger is of best interests for both companies or not.
2: Strategise
Once you have established a level of understanding with the company you are planning to merge with or the company you acquiring, the next step is to enlist the services of a business advisory expert.
This specialist advises both the companies on
- Effective restructuring of the business
- The legal implications
- Tax considerations following a transaction
- Any future business forecasts which could possibly occur as a result of the new company structure
Seeking expert advice and having experts in every stage makes sure that both the businesses receive tailored, thoroughly considered advice. It will take into consideration both their future objectives and keeping them updated on all their available options.
Here money plays a vital role. Both the companies have to invest certain amount to take the collaboration ahead. If you feel you are falling short on the investments or feel that there is no money left to continue your business operations, worry not!
Cash flow finance is one of the many funding options made available by alternative finance firms across the country. This funding option is not only used by small companies in need, but it also helps big enterprises during merging and acquisition.
Have Enough Liquidity in the Business
Like we mentioned above, money is a crucial factor during merging and acquisition. Therefore, it is necessary to have a financial stability as it safeguards the continued growth and success of the companies.
As available liquidity or funds often, an overlooked factor by most of the companies. It is not only essential to establish in the company that you may be merging with or acquiring, but it is also essential to assess your own liquidity.
Without assessing your available funds and planning to merge or acquire could put your business at risk and make the transaction unsustainable.
Organise Your Due Diligence
When planning to merge or acquire a business, it is important that both the companies provide sufficient financial information immediately and in an organised manner. Having all the required and relevant information organised, it will assist both the companies in identifying any potential issues before the transaction proceeds. This entire process is known as due diligence.
Due diligence helps buyers an opportunity to investigate the business they are planning to purchase and validate what is been claimed by the seller and identify any potential issues with the transaction.
For businesses planning a merge are advised to undertake their own due diligence investigation with the company itself. This helps ensure any potential risks at an early stage.
Office Culture and Staff Integration
Mergers and acquisition are more like forming a new business venture. However, both the companies involved in this transaction will have their own pre-existing teams who are familiar with their own company culture, policies and area of responsibilities.
It then becomes the responsibility of the managers to ease the transition of merging teams and office at an early stage. This can be done by encouraging frequent communications between the staff of both the companies.
Make sure that they communicate openly from the beginning so as to establish an integrated and successful working relationship between the two companies.