M&A is an effective way for companies to grow. The process of acquiring a business dataroomplace.blog/which-process-can-be-accomplished-with-due-diligence-data-rooms/ is fraught with potential pitfalls that could result in acquired businesses losing their value. Making sure you follow these four steps to an acquisition that succeeds can help you avoid common pitfalls and make your next acquisition a winning strategy to grow.
1. Create an acquisition plan.
Poor planning is one of the most common reasons for failure in acquisitions. By creating an acquisition plan prior to the start of your acquisition you can be sure that your company is maximizing value and staying on track with the goals of your M&A strategy.
Typically, this means establishing an inventory of M&A target companies and then reducing that list with the use of search criteria. These could include sector of the industry size, deal value, market share, and operational scale. Corporate development teams can use numerous resources to identify M&A companies to target, including online sources such as DealRoom and LinkedIn trade publications, industry associations and databases of investment firms as well as private equity firms.
2. Create a team to oversee the M&A process.
It is essential that management teams establish the team under the direction of an executive at the top who can supervise the M&A from start to finish. This is critical to ensure that the goal of the acquisition won’t be lost in the process and that the integration process runs smoothly. It is also crucial to have human capital experts on the M&A team to calculate the costs of compensation and benefits, and to quantify the actuarial value of pensions and other financial liabilities.
