5 Tips for a Successful Merger and Acquisition

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Acquiring a new company is a complex process that requires excellent precision to facilitate a successful merger. Combining two entities includes merging computer systems, files and integrating different departments and financial accounts. Nevertheless, when merging and acquisition are done appropriately, there are numerous rewards. These expert tips will help you avoid making mistakes that can hamper your merger.

1. Organize your finances

The first thing you should do before going into a merger is performing a financial health check. Merging might destabilize your business and shake your accounts to their core. It’s therefore necessary to assess your accounts and confirm that you have sufficient liquidity to take you through the transitioning period. Additionally, you should ensure your financial structure can sustain extra pressure and what funding alternatives are available to you if the system fails.

2. Practice due diligence

What is due diligence? Merging should never be a rushed decision. Take your time to understand the other company before acquiring it. Start by scrutinizing their books, policies, legal aspects, technology, and overall operations. Doing background checks of the merging partner helps you make informed decisions during the merge.

3. Create a transition team

The success of a merger and acquisition depends on the team that drives it. According to McKennnie’s research, 85% of M&A fail due to poor planning. Your first step should be to set up a team that oversees the transition process from the beginning to the end.

A great M&A team should have members drawn from various departments; finance, marketing, sales, and executive departments. A perfectly represented team has a high likelihood to tackle all aspects of transitioning successfully.

That is not all; the team members selected must-have skills to manage strategies and interpersonal relations. Transitioning is a delicate process, and even the slightest of errors can amount to expensive failure. Your team will heavily rely on its leaders, which calls for selecting only the best members from both companies as the team leaders. They should have excellent management and communication skills to provide direction to team members.

4. Define your goals

Do you know what you want to gain after the merger? Where do you expect your business to be at the end of the transition? It would be best to have a clear vision of how the merger will improve your current position. The transition should facilitate future growth and not drag your business behind but rather propel it forward. 

Lastly, the coalition should foster your company’s mission and brand identity. The aim of the union can be to eliminate competitors, expand markets or increase product variety.

5. Be transparent

You are merging two or more entities into one, and a lot of misunderstanding could occur as the two systems interact during the merge.

Keeping a clear communication channel dispel any rumors and misunderstanding which are expected during the merge. Both sides should be served with similar information to ensure that you are all on the same page.

Endnote

Mergers and acquisition often fail due to simple mistakes which you want to avoid when managing a merger. Following these tips gives you a chance to conduct a successful merge.