The merger and acquisition process has always been popular in the market world. Mergers have helped companies quickly increase market share and reach, and acquisitions have played a major role in strengthening U.S. businesses. There are plenty of new opportunities for established companies in the marketplace, as there are now solutions for successful acquisitions that could only have been dreamed of before. In this article, we’ll look at how to conduct an effective acquisition deal.
The harsh reality of the acquisition process
Of course, many companies are attracted to the prospect of acquiring and strengthening their market position, but the process is very complicated and convoluted. Based on statistics and numerous studies, we can observe that more than half of all acquisitions fail to produce the desired financial outcome for participants. The main reason for all failures is the company’s inability to continue the intensive integration of the two companies, due to their completely different office structures. Often, deal leaders don’t pay attention to compatibility with potential partners because they are too preoccupied with examining the company’s financial performance. But for your deal to be truly successful, you need to create synergies. With an acquisition, the company greatly expands its scale and production, which leads to economies of scale, and allows the organization to save on costs, lower product prices, and become more competitive. Also, it allows them to make efficient use of their combined material and human resources. But this only happens when the acquisition and integration have been successful.
Key Steps to Make a Successful Acquisition
Below we highlight the key points you should consider to make the acquisition process a success:
- Early preparation
Any business acquisition consultant will tell you that it’s best to start developing an integration strategy as soon as you start thinking about making an acquisition. By the way, hiring the opinion of an expert, namely an acquisition consultant, to develop that strategy can also be a very helpful action for you.
- Cultural Compliance
Every company has a certain pace, a view of how the work process should take place, in other words, its own culture. If you try to fit and rebuild the culture of another company to your tune, you will encounter resistance from the employees and executives of the acquired company. In that case, you will never be able to reach an agreement and therefore synergy. Therefore, you should pay more attention to the culture of the company, you can learn about it from the culture audit that you can study during the acquisition planning process. This audit will not only help you determine your compatibility but also how much effort you need to put into achieving synergy and the market value of the company.
- Communication Strategy
An acquisition opens up new opportunities and a new vision for the future for all stakeholders. But if you fail to properly communicate the benefits of the deal to employees, customers, and suppliers of both companies involved in the transaction, you risk losing valuable workforce, resources, and more. In order to prevent this, you must develop a quality communication strategy. As managers, you are required to announce all new information in a timely manner and how it will affect future operations. In this way, you will reduce employee anxiety and help create a more cohesive team that facilitates an accelerated and effective acquisition management process.
- Adequate leadership and resources
Often the work of a newly formed company comes to a halt because employees don’t understand their future roles and responsibilities and don’t know their leaders. The company should appoint new managers as soon as possible and announce this to all stakeholders.