Merging with or acquiring another company can be a very effective strategy for growth and much more. We will touch on this a little later. Even with an effective strategy, mergers and acquisitions (M&As) can come with many challenges. In fact, it might surprise you to hear that roughly 90% of proposed M&As fail, and this is usually because they have not been dealt with correctly.
If successful, M&As can come with a whole load of benefits. In this article, we will focus on lessons learned from success M&A outcomes.
It is important to remember that the key to sustaining these benefits gained through an M&A is through ensuring the post-merger integration is a success.
If this is the case, major goals like profitability and growth won’t be far behind, so you should make this the core part of your M&A strategy.
Consolidation
Understanding why a business might embark on an M&A attempt is a good place to start. Most companies consolidate for several reasons, the most common of which are below.
- To remove excess capacity.
- To increase market access.
- To acquire technology.
- For new business development.
- To improve the target company performance.
More often than not, the main reason includes growth in some capacity, either providing new topline revenue, or improving bottom line profitability.
Today, companies are no longer restricted to one country or region. Many companies successfully embarking on M&As are purchasing across borders.
When we look at successful M&As, there are clear themes in the lessons people have learned. Here are the main ones.
Time
Time is very important for a successful M&A. The longer the process drags on, the worse the price and terms get for the seller, and there is a risk of the deal not happening or falling apart. New issues can also evolve, such as price reductions.
M&As are a slow process, and there is a lot of emphasis on timeframes. Planning is absolutely crucial.
Recruit help to drive the sale, then keep it moving along.
Change is constant
Your company might look as though it is leading the game in today’s market, but change is everywhere. Technology and the rise of the new digital age has disrupted the old ways of doing things and investing in new concepts is the answer.
So unless you’re keeping up with the times when you merge with or acquire another company, you’re likely not going to do very well.
When you want to merge, take into consideration cyber security, mobile, and artificial intelligence. These are the three big institutions these days.
If you are merging with or acquiring another company, our advice would be to seek professional help before you go bulldozing in.
You should employ a change manager
It’s critical that a holistic, effective integration program is put in place if you are planning on merging with or acquiring another company. Proactively addressing the change your employees will experience is incredibly important, as is determining early on how you will integrate systems, for example.
A change manager can help you with this. They’ll look at the change as a whole and figure out how the change can be effectively managed. They’ll save you time, money, and aggravation, so that you can continue with business as usual.
Culture should be considered
There may be some very apparent cultural differences between your current company and the one you are merging with or acquiring, as well as some not so obvious ones. Cultural problems are renowned to arise during M&As, and with this comes frustration, stress, lack of productivity, and many other issues involving everyone from frontline workers to company directors.
Yorkshire Change Can Help
If you’re planning on merging with or acquiring another business, this is a major change for your organisation, and you need to recognise the complications that come with this. M&As are complicated and take time, and they require a change in attitude and working methods for lots of people, sometimes hundreds. Don’t kid yourself that there are parts of your organisation that will not be touched by the change.
Not everyone will like it, either. In the midst of all this, you need to continue business as usual, so that revenue doesn’t decrease and you don’t lose everything. Is it any wonder such a high number of M&As fail?
We would really recommend that you hire a change manager as early as possible, preferably before you’ve even decided which business you want to merge with or acquire. They’ll help you to determine if it is actually possible to do, and tell you how you’ll achieve your objectives, how long it will take, and how much it will cost. Then they will guide you and your staff through the entire process to meet a number of agreed objectives, with as little disruption as possible.