The acquisition of a business is an investment in the long-term that can take many months (or even years) to complete. This is why businesses of all sizes place such a high value on M&A to help grow. While every acquisition is a slightly different, there are some basic steps that companies must follow to ensure that the deal is likely to succeeding.
1. Define the strategy.
A well-thought-out M&A strategy should include the precise definition of what you would like to accomplish through an acquisition, including growth in revenue and client base and exposure to new types of clients. It also includes a thorough analysis of your financials that includes your current financial situation and projections of the market.
2. Conduct searches
The due diligence process is a crucial step in M&A and includes the double-checking of financial documents and conducting search on the company’s records to discover tax liens, bankruptcy filings, litigation and fixture filings as well as IP. It’s an excellent idea to check the social media presence of the company reviews, review sites, and testimonials for more information about how it operates.
3. Look for warning signs.
While there is a temptation to look for deals that could “rock the world,” it’s important to be realistic about what your goals are, how they align with your resources, and if the culture of your target aligns with your own. It is also important not to be so eager to make deals that you don’t consider any red flags that may arise in due diligence or during the process of integration or change management.