Acquisitions can have an impact on growth. However, the outcomes of an acquisition may vary greatly based on how it is executed. Most successful acquisitions follow a set of consistent guidelines to guide them through the M&A process.
The first step in the M&A process is defining your motive for an acquisition. This will help you establish a framework for all future actions and decisions. Acquirers with a clear understanding of their motivations are more likely to avoid common pitfalls that arise from acquisitions, like being adrift, rushing into the acquisition before due diligence is complete, and overpaying for a company that is likely to be a poor fit in terms of both strategy and culture.
Once you’ve established a clear purpose then the next step is to formulate detailed search criteria for target companies. This could include factors such as industry focus and geographical location, financial health, and intellectual property aspects. The best M&A teams use a number of sources to identify potential candidates, ranging from databases to online portals, and then make their list more specific to “A” and “C” deals.
After a long and difficult due diligence process comes the final stage of creating a corporate story. This is the story you will tell to clients as well as suppliers and competitors. It’s therefore important to make sure it’s a positive one. Also, it’s crucial to consider the effect that the acquisition will impact your P&L and balance account.
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