How to Have a Successful M&A
Mergers and acquisitions involve the combining of the assets of two or more companies (merger), or the purchase of one company by another (acquisition). They are common in the business world, but the fact is that it can be difficult to achieve a successful outcome without expert advice (check out Generational Equity Reviews for guidance), especially for mid-market companies. Here are some key reasons why M&A deals can fail and how you can prevent that from happening to you.
Financial disclosure – it may be the case that there was not full-disclosure of the information needed for the buyer to make an informed decision. This could include hidden financial details, buried performance forecasts, or some other information that has a bearing on the true costs of the deal for the buyer. Make sure that you have done due diligence on the company, and also that you have undertaken your own studies and forecasts. You may be concerned that this signals to the other company that you don’t trust them, but if they are being transparent they won’t have any concerns and will certainly appreciate the care that you are taking to ensure the deal is a good one.
Customer Service – Without careful planning, M&As can easily disrupt sales as new lines of responsibility or corporate practices are being hammered out by teams that need to learn to work with each other. Customers can easily fall through the cracks. Make sure that you have a plan in place to integrate the sales and customer service teams before the merged company “goes live” so that everyone knows who is responsible for what, and the transition is seamless from the perspective of the customer. You should also be sure that you keep customers informed about the process and provide assurances that their accounts and relationships will be seamlessly managed within the new corporate structure.
One Team Now – In hostile takeovers especially, deals can turn sour if the “losing” side feels that its interests have not be represented, or long-term expectations encouraged within the previous corporate culture are not longer being honoured. Established practices may be overturned without explanation or consultation, and people who had previously been on track for promotions may feel that they have been pushed off that track as a result of the new circumstances. Key personal may decide to abandon what they perceive as a sinking ship, and productivity may suffer as well. Be sure to cultivate a new and inclusive corporate culture that draws on both companies, and be sure that these issues are addressed in the negotiations leading up to the merger or acquisition. Reassure employees of both companies that their concerns will be listened to and their contributions to the new company will be values.
When it comes right down to it, transparency and communication are the most important keys to a successful merger or acquisition. Failure to get and share information and to keep the stakeholders informed will very have a bad outcome for even the most promising merger.