Increasing the Chance of a Successful Acquisition or Merger

In today’s environment of global competition, growth from within your company can only take you so far. One strategy is to grow through mergers and acquisitions, to enter a market or acquire innovation capability. It is highly risky.

Making a deal work is one of the hardest tasks in business. How can you reduce the risks and increase the chances of carrying out a successful acquisition or merger?

Taking a Risk to Grow

 There are four major steps in a merger or acquisition process:

• Accurate Business Valuation: Calculating the true worth of your own company or one you want to acquire is easier said than done. It also has a lot to do with supply and demand. But purchasing an attractive start-up company can stop a competitor from getting its foot in the door.

• Due Diligence Process: Knowing what to look for and how to find it in the records is the key to an effective due diligence. Many companies want to avoid costly experts and conduct their own due diligence. But their people often lack the skills needed for this process. The task is even more difficult when your acquisition target is in another part of the world.

• Integrating Financial Operations and Consolidating Accounts: Merging two organizations can become very complex, especially when the merged companies are from two different countries. A well-done consolidation makes it possible for the merged company to keep accurate financial records and data that are the basis of strategic and operational decisions.

• Integrating the new organization: The Key to a Successful Merger: Merging two organizations involves managing a whole series of changes. When people in two countries are involved, there is another level of complexity to deal with. During this phase of the merger, the smart CEO will spend as much time analyzing the people issues as the balance sheets.

(Abstract from the source: http://www.mce-ama.com/executive-issue-38-pharma-industry-2012/ │ “Increasing the Chance of a Successful Acquisition or Merger” │Management Center Europe – www.mce.eu │The Executive Issue: No. 38 – 2012)