Tips to Ensure M&A Success

It is an unfortunate fact, but mergers and acquisitions activity often fails. On the face of it, that might not be too much of a problem –there is always another potential buyer waiting, or another company to target. The reality, though, is that a lot of time, effort, and stress can be invested in the process from both sides before it becomes clear that there will be no successful outcome.

To help you maximize your chances of a successful transaction, we have compiled our three top tips to ensure M & A success.

Get yourself ready

Are you prepared for when it comes time to finally hand over the keys to the business? Are you ready to invest so much money to take over the company? Cold feet are one of the biggest reasons for business transactions to fail –it is, after all, a big step for both sides of the trade. It is fine to be nervous –indeed, it might be odd if you were not –but be sure that you are emotionally and financially ready before you start down the M & A path, or you will be wasting your time.

Prepare your documents

Another common reason for transactions to fail is that they are taking too long. Buyers can lose confidence, start to have second thoughts, change strategy, or even find another acquisition target if the timeline is excessive. Mergers and acquisitions always take a good amount of time, but one of the ways that you can streamline the process and speed things along when you sell your business is by having your financial reports and documents in good order.This will mean that when the due diligence phase is underway, all your financial, contractual, and operational documents are organized, accessible, and accurate –you won’t have to go back and forth with the seller as they request something that you do not have ready. Having everything organized is also a great way of encouraging confidence in the buyer as your company will look and feel as if it was managed well.

Pre-screen

Pre-screening the other side of the transaction is one of the best things you can do to ensure that you are not progressing with the deal when it will ultimately not work out. For the seller, you need to find someone that has the money available to purchase your company, and the ability to keep it running (if that is a priority for you) and for the seller, you need to ensure that the asking price is going to accurately reflect the value of the business, the seller is genuinely ready to sell and move on, and that there will not be any restrictive caveats that you are not comfortable with –keeping employees or maintaining certain deals, for example.