Mergers and acquisitions are integral to the globalization process. However, as always in the M&A game, there are several significant issues, facts, circumstances and dynamics, which play an important role in ensuring whether the merger and acquisitions is a success or not. This is particularly true when an international dimension is involved, or when the buyer is new to the M&A market. Listed below is a checklist of the essential merger and acquisition criteria needed to ensure that your merger or acquisition is a success.
- Ensure that your company is not only financially capable of the acquisition or merger, but more importantly if you have the adequate resources needed to manage the required changes after the merger & acquisition.
- It is preferable to acquire a company/business that is smaller than your present business. More often than not, this leads to a higher degree of success.
- Make certain that that you are clearly able to define and understand the challenges you face. For instance, if you were planning a vertical merger, the most common challenges would be to integrate the two businesses and cultures, and to manage significant change, especially within the supply chain.
- Always remember that the merger or acquisition is not your primary business but rather a strategic decision that allows all or some of the following benefits.
- It fits your long-term goals
- It precipitates quick planned-for growth
- It gains you an increased market share
- It ensures that you are the primary pricing leader
- It helps gain ground over the competition
- It enables you to rapidly add equipment, people, and customers
- It promotes savings
- It allows you to become the market leader
- It provides you with efficiencies related to economies of scale (from production, inventory, purchasing, sales and marketing, administration perspectives and more)
- Finally, although a merger or acquisition may seem opportunistic (you may be getting it for a great price), you should always opt for an M&A only for its strategic value. Before making a decision, ask yourself questions like
- Do I really need the additional capacity the new company/business brings?
- Will the extra labor force/equipment be an advantage or disadvantage?
- What will my financial options be?
- Will the acquisition or merger bring in vertical opportunities like new markets and new products?
- Does the new acquisition bring in other business customers that I presently do not have?
- If it is a merger, will there be enough market potential for a combined business?
Attract Capital is a reputed financial advisory firm with a 25-year old knowledge base of the private capital markets, a lender platform of 100+ acquisition-financing lenders and a proven workflow process. We provide Merger & Acquisition consulting services and can help prepare a merger checklist or acquisition checklist that will ensure that you shop better. We can also work with you to provide the best possible acquisition funding structure that enables you to gain more capital at a lower cost.
Contact us with your merger and acquisition needs. Our M&A consultant will set up a free consultation designed to address your specific needs.
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