How to ensure mergers and acquisitions deliver on your business transformation objectives
How to ensure mergers and acquisitions deliver on your business transformation objectives
Merging with or acquiring another company can enable you to invest in new products and talent to grow your business. However, you need a strategy to ensure your success. You can get started by:
- Investing in due diligence
- Defining your expectations
- Choosing the right team
- Communicating your intentions
Having a plan in place well ahead of the closing date will support the full integration of the company and drive the value of your business forward.
Merging with or acquiring another company is an exciting opportunity to grow and increase the value of your business. However, most deals fail to add long-term value — and according to Harvard Business Review, anywhere between 70 and 90 percent of acquisitions fail.
Some common challenges businesses face when embarking on a merger or acquisition include a lack of proper planning, a clash of company cultures, and unclear expectations around how the deal will add value to your organization.
Additionally, the current economic environment has created new considerations for business owners who are looking at mergers or acquiring new companies — including decreased customer demand, high costs, and reduced leverage. It is essential to adjust your mindset about how to create and preserve value in an uncertain economic landscape.
A strategy will help you to overcome obstacles and maximize your chances of success. In this article, we provide some practical tips to guide you through the mergers and acquisitions process to help you grow your business and drive its value forward.
Get clarity on today’s most pressing issues
Why an integration strategy can help build value
Gaining new talent, products, or technology can provide numerous opportunities — however, today’s economic environment also poses new risks.
It may be difficult to achieve the value you desire from your transaction when customers are reducing or deferring non-discretionary spending. Additionally, your business may be grappling with reduced leverage, higher cost of capital, and increasing costs brought about by labour shortages and inflation.
While mergers and acquisitions can be a powerful tool to drive business growth, according to a previous study almost half of deals bring neutral value — or fail to meaningfully transform a business. You need to take a strategic approach toward both the pre-deal planning process and post-deal stabilization period to enhance value and ensure your integration is successful.
Each strategy will be as unique as the two companies that enter the process. Still, every successful merger or acquisition will prioritize clear communication and proper planning, have a clarity of purpose, and be supervised by a dedicated team to guide the integration process.
What steps can I take for a successful integration?
These four steps can help you address challenges during the process of merging with or acquiring another company to achieve a successful integration:
Take the next steps towards success
While you may face obstacles along the process of merging with or acquiring another company, appointing the right team to manage the process, and communicating clearly throughout each step of the journey can help maximize your chances of success. Investing in a strategy that prioritizes due diligence, clarity of purpose, and value creation will help you address potential challenges and meaningfully grow your business.
Contact us
To learn more about strategies to help achieve your growth objectives, contact an advisor on our Corporate Finance team.
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