Top 3 Middle Market Merger Must-Have’s Before Your M&A

Posted on: November 24th, 2016

middle market merger Mergers among middle market companies are on the rise, but not everyone ends up getting the best deal. Very often mergers are not able to reach their full potential due to various reasons.

These include unrealistic goals set, divergent cultural attributes that cause friction, and unpleasant discoveries due to lack of due diligence and poor integration after the deal is over.

However, this can be avoided if mid-market CEO’s pursue a strategic approach to their firm’s merger pursuits. Here are three vital must-have’s before you consider a M&A.

  • A Clear Acquisition Strategy

Draft your merger  strategy around what exactly you are seeking to gain by the merger or acquisition. Are you seeking to recruit talent or attract a specific skill that your firm needs?

Are you merging because you wish to expand to a new geography? Is your merger aimed at adding a new specialty service or industry revenue stream? Writing out your firm’s main goals and expected outcomes will help crystallize your thinking and reinforce your value set.

  • A growing business

Make sure the target company is on track and is tapping the levers of top-and bottom-line growth.  Look at the target strategically and judge the merits of the acquisition objectively.

Look for common factors that might be suppressing the target’s growth rate such as like problem employees, failed products still bumping along, or underperforming locations are dealt with.  Make sure the systems and processes are in place to drive organic growth.

 

  • A proactive network

The business world thrives on the ability to network, and when it comes to M&A, creating relationships with potential targets can go a long way in paving the road for a smooth deal. Create your own leads and generate proprietary deal flow.

Get to know potential sellers and give them the opportunity to know you. In the process, you will better understand their objectives and business needs.

By putting some thought and effort into the above aspects ahead of time, the actual M&A process is streamlined.

Furthermore, it will enable you to quickly and clearly prioritize which elements of a particular business meet your ideals, facilitating not only a smooth transaction process but also ensuring than your mergers and acquisitions are a resounding success.