Being aware of the steps involved in a typical merger and acquisition (M&A) process helps people prepare for them in advance. Of course, this preparation involves gathering the right materials for the job at hand.
Steps to Successful M&A Deal
Most important, it means considering your negotiation strategy, questions you’d like to ask during due diligence, and who needs to be involved in the deal.
Here’s an overview of the typical acquisition process from start to finish. It goes without saying that these tips aren’t specific to any one deal type; they’re just guidelines for making sure you get the best results out of each offer.
You don’t need to be an expert at mergers and acquisitions (M&As) for them to help you get started. However, if you’re not familiar with these types of deals, they may take longer to complete than someone who has been doing them for.
Creating an acquisition strategy
Buyers need to start by figuring out what they want to get out of an acquisition. Possibilities include:
- exposure to new markets
- competition elimination
- By finding ways to lower costs through synergies.
Building a long list of targets
interested in acquiring your company, the next thing to consider is finding someone willing to buy your business.
It may not be as simple as it seems, because most business owners don’t operate their companies for an instant profit.
You may want to look at some online resources for finding suitable companies, including industry associations’ websites and LinkedIn. But chances are you’ve got a couple in mind already.
Refining target criteria and evaluating potential target companies
After acquiring their initial list of potential targets, they’ll want to establish criteria for which ones to focus on first.
For companies looking for deals worth $1 million or less, they may be interested in pursuing smaller acquisitions. For larger deals, however, there are several considerations Once they’ve identified their key performance indicators (KPIs), teams should develop lists of “A” deals and “C” deals.
A good acquisition candidate would ideally be large enough in scale and strategically aligned with our business objectives. Listing A and C deals help buyers avoid making mistakes by not buying at high prices.
You need to store your database files somewhere safe where they won’t get lost or damaged. A good place for storing these files would be an online storage service (like Dropbox) so that you don’t lose access to them if something happens to your computer.
Making initial contact with targets
Once a company has been identified as an acquisition target, it’s time for corporate development teams to approach them directly.
Finding someone who knows something about the topic is important.
It depends on the size of the business whether this can be done via LinkedIn. You should contact the most appropriate person first.
- board members
- heads of strategy
- heads of corporate development.
It doesn’t really matter which method you use when approaching these people; just be polite and don’t come across too strong.
Let them know that your intentions are good, but let them know that you’re not trying to be rude by letting them know that they might get a better offer from someone else if they don’t sell their business to you. Don’t be afraid to experiment. It’s important to remember the end game when going through the various steps involved in M&A.