Mergers and acquisitions is a complex process. It can be difficult to know exactly where to start, what the right moves are, and how to progress post-merger. We’ve compiled a list of some of the most common challenges during all stages of the M&A process and how to deal with them. Continue reading to learn how to overcome these challenges and complete a stronger M&A transaction by avoiding them.
Your employees make your business what it is. Every company has its own unique set of values, styles of work, and overall social culture. When seeking out an M&A transaction, it’s important to keep in mind the cultural differences and similarities. Identifying potential areas of conflict will help you overcome possible post-merger integration issues.
Due diligence may be the most important part of mergers and acquisitions. Rushing the process or not being thorough can result in numerous issues. It’s important to know what deal you’re getting before you finalize your transaction. Prepare a strategy and commit comprehensive due diligence. Connect with an expert, like an M&A advisor, to properly analyze all potential risks and opportunities.
Valuing your business or prospective purchase is a complicated task. A business valuation takes into account many things, including cash flow, liquidation value, and current market conditions. There are numerous ways to obtain a business valuation, but not all of them are created equal. To ensure you’re receiving the best deal possible, reach out to trusted financial and M&A advisors.
Mergers and acquisitions can be a great way to gain market share, increase your business’s value, and more. However, these opportunities don’t come without a price. You need more than the minimum funds required to complete a transaction; you need the financial resources to continue daily operations afterwards. Seek out financing options and don’t underestimate the value a financial advisor can bring to your team.
Completing a merger or acquisition doesn’t just affect you and your business. Your shareholders, employees, family, and friends may all be impacted. Miscommunication or the outright absence of communication could dismantle everything. It’s common to hear that confidentiality is important, but timely, clear communication is more important. Announce things to shareholders and high-level employees sooner rather than later. Don’t keep your employees in the dark too long, or risk a potential exodus.
State and federal regulations must be kept in mind when completing an M&A transaction. If you fail to comply with regulatory requirements, you and your company may be subject to fines and lawsuits. During the due diligence phase, seek out potential legal issues and resolve them before the deal is done. If you’re unsure what your state’s requirements are, contact an experienced M&A advisor.
It’s easy to think the work is over once the deal is done, but that isn’t the case. The post-merger integration process is largely considered to be the most difficult part of an M&A deal. Merging two companies that previously had no connection is a lengthy, complicated process. Without the proper strategy, the potential synergies you identified in earlier stages won’t come to fruition. When connecting with M&A professionals, discuss what a post-merger integration plan looks like for you.
With the proper planning, all of these listed issues are avoidable. Don’t start the M&A process without the right team behind you! Connect with Stony Hill Advisors today to learn more about how we can assist you in your exit plan. Let’s work together.