A merger or acquisition can be very beneficial to your company. The primary purpose is to increase the value and accelerate the growth of your business. Both of these allow your company to grow at a rate that would not have been possible organically. Of course, this is provided that the process is done correctly.
All too often, operating on a few misconceptions can derail or make the process more difficult than it should be. Every company will go through a different approach depending on its business structure, internal policies, and overall management. But there are still a few standard procedures you can expect, like the following:
- Landscape and Acquisition Strategy: Assessing the current market landscape and competitor set.
- Business Case Evaluation and Valuation: Working with the M&A team, financial advisors and legal experts ahead of the Letter of Intent (LOI).
- Due Diligence: Acquiring company assesses all relevant company functions and departments.
- Negotiations and Signing: Upon the completion of due diligence and all necessary approvals, the final bid is negotiated and agreed upon.
- Financing and Implementation: Finances are finalised, and company integration begins.
Here are a few things you should consider carefully to avoid making mistakes:
Before the process of a merger or acquisition begins, most people not only hope for short timelines, they expect it. There is a common misconception can take only three to six months to complete.
The process of identifying and measuring your initial investment alone can take quite a long time. You need to scrutinise every detail with your partners and advisors before proceeding with anything. The more realistic timeline to complete a merger or acquisition is at the very least 12 months.
First, you have to lay the proper groundwork by market research, developing strategies, and studying prospective companies. It can be a long and tedious process. Rushing the process could lead to mistakes that have severe consequences.
You might think that the best way to get what you want and find success for your company is through aggressive tactics and initiative to close the deal. The drive and ambition behind this mindset are admirable. However, this is not where your focus should be.
Getting the best deal out of a merger or acquisition is all about tact and strategy. You must maintain discipline and caution at all times. As mentioned, the process can be complicated because of all the research and fine-tuning required. But focusing solely on closing the deal can lead you to make rash decisions that can impact your success later.
Restructuring is going to be another big challenge after completing a merger or acquisition. This ties into your focus. How will you achieve harmony and balance between all the existing talent and staff in both companies? You should have a plan in place long before the deal is complete. This should be a part of your initial planning stage.
The more detailed your restructuring plan is, the sooner you can start reaping the benefits of the deal. Think about how you’re going to integrate the new employees into your company and how best to compensate them and endear them to the new business culture. You don’t want to risk alienating your new staff, as this can breed dissonance. Eventually, it can lead to inefficiency that can affect your bottom line.
The most important thing companies want to avoid is the risk of failure. Failure could refer to maintaining compliance and performance once the merger or acquisition is completed. Everything involved in a merger and acquisition can be complicated, from start to finish.
But if you proceed carefully with caution and full awareness, you can come out of the process stronger as a company. You must seek legal advice from trusted professionals to ensure the best outcome.
To ensure that your mergers and acquisitions go smoothly, we’re here to help you. GLG Legal is commercial and property law firm based in Brisbane. Our corporate lawyers provide you with intelligent, innovative, and practical solutions to your legal troubles. We are as driven and ambitious as our clients and understand the need to improve better than anyone.