About 35,000 M&A transactions are carried out annually in the world, the total budgets of which reach $4 trillion. But despite this, Harvard Business Review research shows that in 2020 more than 80% of mergers and acquisitions did not live up to expectations. Why do such projects become unprofitable?
The main reason is errored during integration. They take over the three planes like whales that underpin failed M&A deals.
The first is blurry goals. Depending on the M&A strategies, the process and result of integration can differ significantly. When companies fail to assess the cost of a deal and key risks, priorities are lost. Current issues – integration programs and their launch, transition to line management, building a business unit budget – require involvement and distraction. As a result, the goals are not formed, which means they are not achieved.
The second is the loss of key people. While companies are waiting for new management models and leaders, talented managers are leaving. As long as companies ignore the issues of adapting to a new environment, they are losing teams.
Third, low productivity in the core business strategy. In some cases, leaders busy with protracted integration do not have time to track performance indicators. In others, it is the result of inconsistent actions and poorly managed system migrations that force managers to take on additional responsibilities. Solving small problems, communicating with clients, and finding new contractors – all significantly reduce the productivity of managers.
How do we unleash the full potential of an M&A transaction and minimize the risks of such a process? It is necessary to build a separate system for each case; that is the difficulty. It is impossible to combine two different trades in the same way, with the same priorities, and in the same schedule. But to make the task more manageable is quite real. Go to the site of the M&A community to find more information and get reviews of businessmen like you.
How To Find an M&A Partner?
Most often, in the process of M&A transactions, the universal model of Watson Wyatt is used, which consists of five stages:
- A decision is made to acquire another company, criteria are formulated, and prospects and limitations of the transaction are assessed.
- Selection of candidates. Independently or with the help of intermediaries, a list of potential candidates is compiled, their business is analyzed, and unsuitable ones are screened out. Sometimes, monitoring potential partners can take several years.
- In-depth assessment of promising candidates. A thorough analysis of the cost and activities of selected businesses is carried out, and a possible synergistic effect is assessed.
- Courtship, negotiations, and bargaining. Points of contact are discussed, contradictions are overcome, and the terms of the deal are discussed. There is a deal.
- Post-deal integration management. A new business model is defined, uncertainty and conflicts are eliminated, and management and production processes are debugged.
The M&A process may take from several months to several years, and the deal can fail at any stage.
Attract More Clients as an M&A
Whoever stays with the best and bigger piece of the pie is because they know where to find the best clients possible. Probably, this will be the common scenario for a big structured M&A firm. So how can you compete at this level with a lack of resources and time?
Access To Information: The First Struggle During an M&A
The first step that you need to take to level up and attract more clients is to get access to all the necessary information through professional database programs like the M&A data room during due diligence.
It will help you make a career-changing connection between a seller and a buyer.
Your company may not be able to afford the cost of gaining access to such programmes. In that case, you have an immediate disadvantage compared to the competition.
But let’s assume you have some familiarity with some of these applications.
To fully benefit from them, you’ll still need to understand how to control them and decipher the information they provide. Unless you have special training or experience, you probably shouldn’t try to make sense of this kind of data on your own. The time and effort required to acquire this information will also act as a hindrance to your progress.
Quantity Equals Success: Competing Against the Big Firms
Let’s look at this from another angle. The manpower of larger companies gives them an advantage in the client acquisition process. If you can’t rely on such a workforce, your business will be at a significant disadvantage. No matter how skilled you are, there comes the point when you need assistance in order to compete with the industry giants.
The Cherry on Top: It Gets Harder
Sadly, we still have more challenges ahead of us. We must accept the fact that the world has changed and that in the modern era, every company needs a web presence. For customers, this is the surest path to you. Thus, you should contemplate whether or not you are technologically literate. Do you know how to use digital marketing tools to set yourself apart from the competition? Do you make a good impression online?
Putting aside digitalization. We must also think about the time and effort required to complete the necessary paperwork, as well as the potential impact this has on your ability to close deals and acquire new customers. Do you need advice on whether or not to retain legal counsel? You ought to, but doing so will only add to your total bill.
Implemented the integration – analyzed the course of events. Did everything work as planned? What would you change next time? Write down your findings and the names of internal and external integration experts so you can do it better and faster next time.
Despite the fact that each M&A has its own specifics, there are many common points in the processes. Their systematization and description will help with the following transactions.