Acquisitions may seem simple on paper, but to make them work in the long run requires strategic thinking and careful planning. Many entrepreneurs are dissatisfied with their latest acquisition if they don’t follow time-tested steps to prepare, execute and integrate an acquisition.
The creation of an acquisition strategy is the first step. The most successful acquirers have well-defined, specific ideas for creating value in the deal. This could include expanding into an international market or filling portfolio gaps. They have an associate in the business and a team who will conduct the analysis and negotiations, and a plan to close the deal.
Valuation and Deal Structuring
The next step is determining that site the purchase price through a comparison of valuation methods with the financial records of the company. It is important to consider the market position of the target, its cash flow predictability and how well it’s been centralized. It is also essential to know if the acquisition is an equity or asset deal and the tax implications.
Negotiation and Closing
Through the entire process, it’s important to focus on the customer. It is also essential to avoid slicing corners in due diligence or ignoring negative findings that could have an impact on the transaction.
It is also crucial to have a team of skilled experts to assist you throughout the M&A process. This is especially important during the due diligence phase where it is easy to let details get ignored. Communication with employees is vital. This could be an emotional time for the employees of the company that was acquired which is why it’s crucial to communicate clearly and effectively.
