Realizing the Most Successful M&A Results
Research shows that anywhere between 70% to 90% of all acquisitions don’t realize the M&A results that the acquirers desire.
The reason for this high rate of failure is a substandard and ineffective integration plan.
A 2015 industry study found that companies with the best M&A results have very successful post-close integrations. Many acquisitions don’t meet expectations because executives don’t do a good job of matching candidates to the strategic purpose of the deal. They fail to differentiate between deals that might upgrade their current operations and those that might significantly transform the company’s growth prospects. Given this issue, many companies frequently pay too much and integrate the acquisition in the wrong manner.
How to get better M&A results
To get better M&A results, a business owner must have critical insight into the target company. That information includes competitive intelligence about the management team, key employees, the company culture, and its customer relationships. A business owner targeting a company has to look beyond the balance sheet and stock prices, and consider the intangible assets that drive a company’s success. This means investigation and documenting the value of these intangible assets in order to look at the company’s future performance. It also means forging relationships with the target company throughout the due diligence process—months before closing the transaction.
In every successful merger and acquisition, we anticipate and expect that the post-close value of the transaction will increase. But how do you predict future success accurately?
Questions to ask in every potential acquisition
Here are some questions that high performing business owners ask in every potential acquisition:
- How does the target company align with its customers, and do they identify their needs and expectations?
- Can you identify their best customers, and how do those customers see the company’s strengths and weaknesses?
- What is their share of wallet by customer compared to their market share?
- How do their customers see the industry competition?
- How do they stack up against the competition?
- Can you identify untapped opportunities?
- How will the cultures mesh after the deal closes?
- What are the priorities after the deal closes?
Those are just some of the thoughts that you must consider when merging or acquiring another company. The task is made much easy with an experienced business expert.
Contact a Business Expert
Andrew is a business expert and has worked with business owners and those seeking to buy and sell businesses in cities throughout the Sacramento Region, like Rocklin, Citrus Heights, Rancho Cordova, Folsom, Elk Grove, Roseville, Davis, El Dorado Hills, and Cameron Park. Andrew can help you with deciding on an appropriate opportunity in the Sacramento region, competitive intelligence, financing, in addition to providing answers to all of your questions.