Four Steps for a Successful Acquisition

M&A is a potent method for companies to expand. However, the process is full of potential pitfalls that can cause acquired businesses to lose their value. By following these four steps, you can help you avoid common pitfalls in acquisitions and make your next purchase an efficient strategy to grow.

1. Plan your purchases.

Poor planning is one of the main reasons for failed acquisitions. By developing an acquisition plan in the beginning, you can ensure that your business is maximizing the value of its acquisition and keeping in line with the objectives of your M&A strategy.

This is done by creating a list of M&A targets, and then narrowing the list using search criteria. This could include factors like the industry sector, deal size and market share, as well as operational scale. Corporate development teams can make use of various resources to identify M&A potential targets, including online sources like DealRoom and LinkedIn trade publications, trade journals, industry associations, and databases of investment banks as well as private equity firms.

2. Establish a team to lead the M&A process.

It is vital that management teams establish an organization headed by an executive with seniority who can supervise the M&A from start to finish. This is crucial to ensure that the strategic intent of the acquisition isn’t lost along the way and that the process of integration is smooth and efficient. It is also crucial to have human capital experts on the M&A team to estimate the costs of compensation and benefits, as well as quantify the actuarial cost of pensions and other financial obligations.

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