Truth be told, mergers and acquisitions allow companies to increase their market shares, maximize profit and enjoy the benefits of working with the best brains in the industry.
One of the most strategic moves when it comes to growing a business is to either acquire a competing company or merge with them.
That said, the question is: how do you know if a merger and acquisition was a great economic decision even before you seal the deal?
In this article, you will learn signs that can help you predict whether a merger and acquisition will be a good decision for you.
Going into a M&A without first understanding these signs will be the worst mistake you’ve ever made. These 3 merger and acquisition strategies will help you know when you are going off the rail:
1. Carefully assess the companies and the people involved
At the time of desiring for a merger or acquisition, what is your financial status? Before starting the integration process you need to assess your business if you truly want to have a successful merger and acquisition.
Does your company have the financial capacity to make and maintain an investment? Do you have the well-trained human resource management consultants that will train the incoming employees so that they will be properly integrated into your company culture?
If your company is the one that is being acquired you also need to be sure someone is not waiting to acquire and bury the vision you worked so hard to build.
It’s okay not to sell your company when the people waiting to acquire it don’t have what it takes to blend employees and systems from the two separate companies together.
Does one of the companies have practices you wouldn’t want to be associated with? Find out or else you may not enjoy a successful merger and acquisition.
2. Work with a team that understands the future of the business
This is perhaps one of the most important things to consider when going into a merger and acquisition.
Does your team have the experience to make accurate predictions of what the financial future of the company you want to merge with or acquire is? I’m sure you wouldn’t want to wake up in the future only to realize that you have been ripped off.
What are the possible challenges of this merger and acquisition? Could they be some unforeseen cost implications that this integration will result in? What was your outcome when you analyzed the organization, financial and legal elements of the integration?
The challenges you go through trying to sell your company in Australia will be entirely different from what another business owner in the United States or Canada will face. Find out what is peculiar to you and your team.
Were your team’s expectations from the deal met? If not, why? You need to approach the negotiation table with the eyes of an eagle so that the sharks don’t eat you raw.
3. Both teams have strong leadership
The extent a business can go is a product of her leadership. If you merge your company with one with weak leadership, then you have signed the death warrant of your business.
Even if you decide to layoff some employees after a merger and acquisition, which oftentimes is a normal thing, you need to insist that key performing leaders are not laid off. These top talents are the ones to sustain the legacy of the company after it is acquired or merged.
Sometimes you may need to send them on a refresher course, especially if the leaders are going to have completely new employees under their watch.
Be careful not to go against the employment laws to avoid being sued by one of your lawsuit-hungry employees. Learn all you can about managing people and having a happy workforce.
If you had a strong leadership team running your business in Australia it doesn’t automatically mean that when another U.S. based company acquires your business that your team will still have the same level of effectiveness. There will be a need for adequate training.
How to know if an acquisition is a good decision is first by looking at the asking price. Is the asking price reasonable? Do you think the company is in any way worth what they are asking for?
Even though an acquisition can help a company explore new business territories and customer segments, if the selling price is unreasonable or they have weak leadership, there won’t be a need to proceed further.