M&A albeit a risky strategy has the potential for immense value creation for any organisation with the right plan and approach
Mergers and Acquisitions (M&A) is like a game of chess. Tactical moves determine the victor, but an effective long-term strategy is what ensures your win. M&A deals produce their own unique set of challenges for any organization and a myriad of things have to go right for the deal to be successful. Starting with a well-planned strategy in place goes a long way in an M&A deal, whether it is expanding into new territories or starting a new product line. It can be a hugely rewarding opportunity, provided the right approach is in place. Management often enters an M&A transaction with high expectations but they often fail to deliver the revenue, cost synergies and shareholder value that was anticipated.
- A clear strategy:
Irrespective of the reasons for the transaction, the entire deal works better if there is a clear cut, well-planned Strategy. Be crystal clear on what you want to get out of the deal. An upfront integration plan is essential to ensure the process goes smoothly and the focus stays on integration.
- The “right” team:
It is important to engage the core stream leaders from key departments such as HR, Legal, Finance and sales and not just top management – the early planning with stakeholders is essential for the deal’s success.
Identify key representatives for the integration, understand who is critical to making the deal work and make sure they are involved early. All of the team members must be able to work together cohesively and must communicate regularly while maintaining a clear picture of the agenda.
- Cultural aspects:
Culture always has the potential to be the achilleas heel of a deal. Some of the largest transactions have failed because of cultural differences between the merging companies. It is imperative, for both organizations, to recognize and address cultural differences and get people of both organizations to interact and understand each other.
Cultural issues have often been given low priority, yet they have the power to derail a deal. The best companies adapt to important aspects of both cultures by investing time and effort in communicating and understanding the priorities of both organizations.
- Regular Communication:
Communicate with employees and address their concerns during an impending integration. During a transaction, employees are often worried about job losses, loss of hard-earned credibility and change of stature in the new entity. Keeping them informed helps to provide needed clarity and builds confidence, minimizing the levels of apprehension which can lead to loss of productivity, and employee attrition.
- Adopt the right M&A tools
Organizations who use disparate tools to conduct their deals face potentially acute challenges such as a lack of transparency, limitations on collaboration and spend a lot of time chasing the status of tasks. Additionally, issues and problems that persist are often not addressed and potentially become the very reasons for failure.
Along with a clear agenda, ensure that you have picked the right M&A tools before the start of the deal to make sure you have the right solution in place to make your implementation plan work. Considering the amount of money and time that goes into a ‘buy’ deal, it is important to have a clear vision and strategy including the right tools for success.
Author
MergerWare is an expert M&A consultancy, revolutionizing the M&A process by bringing together decades of deal-making experience with advanced, yet easy to use technology to help organizations achieve the best possible outcomes from their M&A transactions. MergerWare provides the expertise and the tools that bring out the best in your teams. Get in touch with us sales@mergerware.com.
