Mergers and Acquisitions (M&A) are a natural process of any business, although not all businesses go through this form of transition. Merging is when two companies combine to be one, and acquisition is where one company buys an existing one. Doing either one of these requires corporate restructuring. Smaller businesses may join to become one big one for a greater market reach, and big corporations may join to maximise shareholder value.
These points are important in completing a successful M&A deal:
Make sure your M&A advisors are capable and experienced
To ensure that you understand what may come with this big deal, those who have been through them know what they entail. Naturally, things will change following completion and knowing what may happen on your side of things will prepare you in foreseeing them before it’s too late. It is also vital to understand things before agreeing to an M&A deal.
Don’t take the plunge but don’t hold out
This is an exciting process, especially if you are after business growth, but taking the first offer ends any prospects you would have had with those who would have offered better deals if you had just waited. Having options increases your chances of getting a deal that is worth it. Alternatively, don’t hold off from an offer that reasonably meets or exceeds your expectations with the hopes that a marginally better offer will come to the table.
Know your position without being emotional
M&A deals involve negotiations because the parties involved want to have something to gain. Things could go great today and plummet the next, which could lead to frustration. Remaining cognisant of your emotions and keeping negative emotions in check, or better yet, leaving them at the door, will ensure the deal gets done. Coming off as “too strong” could lead to a result counteractive to what you wanted to achieve – potential deals will run. Misplaying a weak hand may leave you worse off than if you had remained assertive.
When an M&A has been finalised integration into operations, products and personnel may be challenging because the structure which was already functional will now experience changes, and some may be through trial and error before settling into something full proof.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).