M&A is a great method to help companies grow. However, the process of acquisition is prone to pitfalls which can cause acquired companies to lose value. The following four steps can help you avoid common acquisition pitfalls and make your next purchase an effective strategy for growth.
1. Create an acquisition plan.
Poor planning is one of the main reasons behind failed acquisitions. By creating an acquisition plan in the beginning it will ensure that your company is maximizing the value of its acquisition and keeping in line with the goals of your M&A strategy.
This involves creating a list M&A goals and then reducing the list using search criteria. These factors may include industry sector and deal value, market share, and operational scale. Corporate development teams can make use of numerous resources to determine M&A target companies, including online sources such as DealRoom and LinkedIn; trade journals and industry associations, as well as databases of investment firms as well as private equity firms.
2. Form a team to take charge of the M&A Process.
It is essential that management teams set up teams that are led by an executive with seniority http://dataroomplace.blog/successful-acquisition-management-process who can supervise the M&A from beginning to end. This is crucial to ensure that the purpose of the acquisition is not lost in the process and that the integration process is seamless. It is also vital to have human capital experts on the M&A team to estimate compensation and benefits expenses, and also quantify the actuarial estimations of pension and other financial obligations.