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Top Eight M&A Challenges

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Even the greatest companies can fail M&A deals. It is an industry-accepted truth that a majority of companies fail to meet their targets and deal objectives. Simply because businesses struggle to navigate the many hurdles which can arise during an M&A.

Listed below are the top five challenges that deserve special attention.

Technology Gaps

A company’s technology stack may have data gaps. It is to be noted that detecting and bridging this gap for smooth deal closure is essential. Investing in technology with advanced capabilities is a great way to overcome such uncertainty.

Deal Performance Tracking

Traditional deal tracking is more manual in nature, requires time to set up and it can pose challenges to make modifications. Legacy technology only focuses on a few stages in the M&A transaction, rather than facilitating the entire transaction process. Equipping the team members with modern-day tech tools digitalizing the m&a process is key to success.

Working in Silos

According to an industry report, setting up effective M&A processes is one of the biggest challenges to building M&A capabilities. Many teams working with different tools and operating in siloes results in longer hours and larger consultation costs. 

A digitalized centralized platform, enabling smooth workflow even while working in siloes can result in efficient exchange of information.

Weak Security Controls

The pandemic has fast-tracked digitalization. This exponential growth has also made the digital space more vulnerable to hackers. Poor security protocols can expose a company to a wide array of threats.

It’s more important than ever to integrate robust data privacy and add an extra layer of security at all points of the transaction to ensure your data doesn’t fall into the wrong hands.

Lack of Honest Communication

The M&A process is definitely not a cakewalk, it is a difficult one for all the parties involved. If not done properly with proper planning, it might not be a fruitful one. Honest communication is at the heart of a successful deal-making strategy. Without it, a deal is bound to fail, sooner or later. An environment that welcomes honest and open communication will definitely give a boost to all the stakeholders and hence will exponentially increase the chances of deal success.

Loss of Key Personnel & Spending Less Time on Retaining Talented People

For many firms, the loss of important individuals is a serious issue that can lead to a lack of continuity and poor performance. As a result, business owners and managers frequently devote a significant amount of time and effort to retaining excellent employees. To keep your top personnel, though, make sure they understand the company’s potential and how they may grow and develop there. If you haven’t done so already, it’s probably time to do employee evaluations and make sure that everyone knows what’s expected of them.

Due Diligence Phase

During the due-diligence phase, setting unrealistic expectations/targets might have detrimental implications. Every M&A deal is incomplete without a set of expectations and assumptions from the acquirer. In this instance, both parties must examine the deal’s objectives and agree on doable upfront realistic benchmarks for the next several months in order for work to begin quickly and efficiently. Maintaining momentum throughout the integration process requires understanding the project’s ramifications, making appropriate adjustments, and defining appropriate expectations and targets.

Post-Merger Integration

The acquired company might have its own technology, people or systems, and it can be hard to integrate these with your company’s existing standards. If you don’t identify the most critical areas that are creating bottlenecks to the integration process, this can slow down your operations. It’s important to synchronize processes at the earliest.

If the correct plan of action and strategy is used, the level of turmoil associated with M&A and the resulting impact on the company undergoing the process can be reduced. M&A transactions cannot be excluded from the scope of innovation in an era where AI and Automation are rapidly becoming the norm.

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