Many entrepreneurs who create successful businesses eventually dream of being acquired by a larger business which can take their business to the next level. Mergers and acquisitions (M/A) are exciting however they can also be complicated. A successful M/A requires attention and planning in three key areas: legal, financial and process.
Set a Strategic Objective
Before beginning their search, it is crucial that the buyer establish what motivates them to purchase a certain company. The reason must not be vague or general, but rather complement the goals and objectives of the company. This should be the basis of all decisions regarding the selection process, including how wide or specific to search.
Conduct a search
Corporate development teams must use numerous sources, such as industry association lists and LinkedIn, to find target companies that meet their criteria for acquisitions. Teams should also consider the many factors that could affect the cost of an acquisition, like the performance of the acquired company in its market, the position it holds in its competitive environment it holds and its health. its assets, such as physical assets, intellectual property and cash flow revenue.
After the search has begun it’s best to hire an M&A consultant or adviser to assist with the negotiation process. At this point it’s normal to begin receiving a number of bids. At this stage sellers must be aware of the information they provide to potential buyers. Too much information could be a source of antitrust issues and could affect the sale.