Mergers and acquisitions have become an increasingly important and profitable part of the global financial market. During times of stress and change, M&A deals may be the ideal way for a faltering business to survive and a leading company to enter the next level. But for the leaders and negotiators behind these deals, it’s all about how you handle the transaction.
Perform Due Diligence in All Areas
Due diligence must be performed in every area of a mergers and acquisitions deal, from the legal to the financial and the strategic. Most people cover the legal aspect immediately and thoroughly analyze each facet of the financial angle. But the strategic angle is often lost, and it is a crucial element in all M&A deals.
Strategic due diligence in an M&A deal involves questioning whether the potential that is motivating the proposed deal is sound, and two very broad questions must be answered: whether the deal is attractive in a commercial sense, and whether the targeted value is something that will happen in a realistic sense.
Since each M&A deal is different, the team involved in the strategic due diligence process must be from areas of the organization that will draw value in the merger. Build your mycams strategic due diligence team carefully, as it is responsible for spotting a bad deal or a potential snag early on in the process. By finding possible problems early, you can save yourself time and/or lessen the chance of the deal, no matter how good, falling apart at the last minute.
Keep On the Level
According to Harvard Business Review, being able to walk away from a risky M&A deal is a crucial skill. Many businesses have levels in place to ensure mergers and acquisitions pass through the hands of both expert team members and dispassionate executives before approval. This gets the transactions analyzed from all angles before anything becomes final.
Since regular M&A team members may have personal motivations for seeing a deal closed, it is best practice to have someone more removed from the transaction to analyze it as well. Review your team members carefully to ensure that you have the right mix of people onboard.Have a System
No matter what your needs are, systems are necessary for successful M&A deals. The process for these deals must be clearly outlined and available to everyone involved. This way, all areas of the transaction are logged, explored, evaluated and analyzed before any terms become final or money is lost.
Don’t consider previous M&A deals as “case closed” once the transactions are completed, either. A feedback system needs to be implemented so you and your team can learn from past wins and losses. By using past knowledge, you can tweak your M&A system going forward for greater efficiency and less loss.
