Four Steps for a Successful Acquisition

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M&A is a great way for businesses to grow. The process of acquisition is fraught with potential pitfalls which can result in acquired businesses losing their value. It is important to follow these four steps for a successful acquisition can help you avoid common pitfalls and ultimately make your next acquisition a winning strategy for growth.

1. Create an acquisition plan.

One of the most common reasons for failed acquisitions is poor planning. By developing an acquisition plan at the outset you can be sure that your business is maximizing value and staying on track with the goals of your M&A strategy.

Typically, this means establishing an initial list of M&A companies to be considered and narrowing the list by the use of search criteria. This could include factors like the industry sector size, deal size and market share, as well as operational scale. Corporate development teams can use various resources to identify M&A potential targets, such as online sources such as DealRoom and LinkedIn trade publications, trade journals, industry associations, and databases of investment banks and private equity firms.

2. Establish a team that will take charge of the M&A Process.

It is vital that management teams form a team headed by an executive in the top position who will oversee the M&A from beginning to end. This is crucial to ensure that the strategic goal of the acquisition won’t be lost in the process and that the integration process is smooth and efficient. It’s also important to have experts in human capital on the M&A team to calculate the cost of benefits and compensation as well as quantify the actuarial cost of pensions and other financial obligations.