Ensuring a successful merger or acquisition

| Nov 30, 2020 | Business Law |

You own a successful business, which continues to grow. You have a solid employee base as well as hundreds of satisfied customers. However, you know growth opportunities exist, and that is why you and your leadership team ponder a merger or acquisition with another company.

The chance to expand into new markets while gaining a wider customer base entices you. However, you know you have your work cut out for you. After all, a successful merger or acquisition relies on uniting two companies in a suitable way that maximizes value and minimizes any disruptions to the existing business.

Certain steps necessary in the deal

Among your goals is to ensure a successful and smooth merger or acquisition. But what is the best approach to make this will happen? Here are some steps that can help:

  • Review growth opportunities: Research is essential in determining market shifts, demographics, competition and employee base.
  • Identify the right candidates: You want to make sure that this company can help you achieve your financial goals. Perhaps this company will allow you to expand into new markets, and that is good. And it would be beneficial if the acquisition target had a similar culture and values.
  • Consider the benefits or risks targeted firm: Will it be a good fit for your company? What new markets and capabilities will it bring to the combined firm? How does it compare with other potential companies?
  • Determine financial position: Rely on financial forecasts to determine the finance and credit positions of the targeted company as well as the combined firm. Will revenues hit target? Is it realistic for this acquisition to happen?
  • Leadership buy-in: Corporate decision-makers must weigh all upsides and downsides of the potential merger and determine whether to complete.
  • Conduct valuation and risk analysis: Determine the value of the targeted firm and review all options in structuring this acquisition.
  • Perform thorough due diligence: After making an offer, do a complete review of the targeted firm in order to grasp all issues related to the acquisition. Evaluate all areas of the company. This includes its financial, legal and operational operations.
  • Scrutinize performance: Will leaders make difficult decisions to achieve financial goals? Also, determine legal and regulatory challenges as well as the failure risks.

A successful merger and acquisition will not be easy, but it is doable. Hours of evaluation, discussions and hard work are part of the recipe for success. And so is making difficult decisions.

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