Four Steps for a Successful Acquisition

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M&A is an effective way for businesses to grow. The acquisition process is fraught with potential pitfalls that can result in acquired businesses losing their value. Taking time to follow these four steps to an effective acquisition will help you avoid common mistakes and make your next acquisition a successful strategy to increase growth.

1. Make sure you plan your purchases.

Inadequate planning is among the main reasons behind failed acquisitions. By creating an acquisition plan prior to the start of your acquisition you can be sure that your company is maximizing the value of its acquisition and keeping in line with the objectives of your M&A strategy.

Typically, this involves making an inventory of M&A companies to be considered and narrowing the list by the use of search criteria. These may include factors like the industry sector, deal size and market share, as well as operational scale. Corporate development teams can make use of a variety of resources to identify M&A potential companies, which include online sources like DealRoom and LinkedIn trade journals and industry associations, as well as databases of investment firms and private equity firms.

2. Create a team who will manage the M&A Process.

It is essential that management teams establish an organization headed by a top executive who is able to oversee the M&A process from beginning to completion. This is crucial to ensure that the strategic intent of the acquisition isn’t lost along the way and that the integration process is smooth and efficient. It’s also important to have human capital experts on the M&A team to calculate the cost of benefits and compensation as well as quantify actuarial estimates of pension and other financial liabilities.