Strategy for Ensured Success of Merger and Acquisition Deals
In the financial press, stories about mergers and acquisitions between SMEs and large corporations are reported every day. While increasing revenue and exposure to new clients are usually the main reasons behind these deals for a merger, it is imperative that any business wishing to enter the M&A game has a well-thought out strategy to ensure the success in a deal.
A successful M&A is a complex procedure, and the final result is dependent on a number of aspects that both parties need to take into consideration. It is essential to have a top-quality management team in place to ensure that your business is able to successfully navigate the M&A process and produce value. Having trusted external consultants and accountants to assist with this process will improve the overall credibility you can find out more of your M&A strategy.
The first step is to conduct an in-depth check on the financial health of your company. This involves analyzing the financial statements for profit and loss, assessing cash flow and debt/equity ratios and determining if you have the financial resources to pursue an M&A deal. The financial health check will identify any differences between your Management Accounts and Statutory filed accounts, which could lead to confusion for a buyer.
The cost of integrating the two companies is an additional aspect. This could include physical costs, such as merging systems, offices and employees. Alternatively, it could be in the form of human capital expenses, for instance taking into account the cost of benefit and compensation programs. Engaging experts in human capital early in the process will help you assess these costs and incorporate them into your price negotiations for purchases.