Acquisitions are a critical business process that can have major effects on growth. The outcome of an acquisition may differ dependent on how well the deal is executed. The most successful buyers use a consistent set of steps to guide them through the M&A process.
The first step in the M&A process is to define the reason behind your acquisition. This will provide an understanding of your future actions and decisions. Acquirers who are clear on their motivations will be more likely to avoid common mistakes that come with acquisitions, like being adrift, rushing into a deal before due diligence is completed and paying too much for a company that will be unsuitable in terms of culture and strategy.
After you have determined your motivation, the next thing to do is formulate detailed guidelines for identifying potential target companies. This should include factors like industry focus, geographical location, financial health, and intellectual property aspects. The top M&A firms use a variety of sources to find potential candidates. These include databases and online portals. They then narrow their list to “A” or “C” deals.
After a long and often demanding due diligence process the final step is to develop an organizational narrative. This is the story that will be told to clients and vendors as well as competitors, so it’s important that it’s a positive one. It is important to consider the impact that an acquisition will have on your P&L, and your balance sheet.
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