Acquisitions come with a unique set of challenges. Each one follows the same idea, though: two companies unite under the same management to achieve a strategic or financial goal. While no one plans to enter a bad deal, even the most seasoned entrepreneurs can end up bungling the acquisition process. It could be due to poor planning or failing to look at integration problems.
Here are a few tips you can use to execute a successful acquisition:
Determine Your Company’s Liquidity and Financial Health
Before starting with any transaction, it is important that you perform a financial health check. Since the Great Recession, businesses have shifted their focus away from profit and loss statements in favor of liquidity.
Once you find out of your business has the liquidity to sustain an investment, determine whether your capital structure is stable enough to handle the acquisition.
Define Your Goals and Factors for Success
When forming your acquisition strategy, consider your competitive position and future objectives. As a result, you’ll need to know where your business is now, where you want to go, and what you value as a business most. Start by asking yourself these questions:
- Do you want to boost your market share?
- Do you want to expand the products and services you offer under your corporate wing?
- Do you want to break into new and contiguous markets?
- Do you want to eliminate a competitor or achieve vertical integration?
By establishing your goals and determining your factors for success, you can make well-informed decisions and prevent your business from veering off track.
Assemble the Right Team
If you want to acquire a company successfully, you’ll need to establish a culture of constant communication and cohesive thinking among group members. Pool together specialists from the three major divisions (sales and marketing, finance, and operations) to represent those areas of expertise.
Furthermore, you might want to bring in external help like lawyers, investment bankers, and employee benefits experts. By assembling the right team, you can stay on objective and ensure that each group carries out their responsibilities.
Plan the Integration Carefully
Once it’s time to merge the processes and operations of the two companies, evaluate what drives value for your business. Remember: speed is critical at this stage. Save time by making sure that your employees know how to conduct small tasks, such as entering expense reports and checking their benefits.
Ease the transition further by establishing milestones and creating incentives that encourage project completion. Hold the senior management at your business responsible for the successful execution of each milestone to help you reach your goals.
Consult Merger and Acquisition Specialists
By hiring an acquisitions and divestitures firm like us to help you execute the transition properly, you won’t have to worry about lacking a proper integration plan. You can rest assured that we will help keep your business running smoothly while you earn excess returns on investment.
Our acquisition specialists will set up an integration program before the deal closes and help you maintain business performance. Contact us today.