What Makes Successful Mergers And Acquisitions?

BusinessManagement

  • Author Sajith Channadathu
  • Published January 1, 2022
  • Word count 907

Over the years, we have all seen so many mergers and acquisitions fail to yield the expected result in terms of profit longevity and overall success. Also, we have seen so many others end up successful and resulting in the birthing of a successful organization. The success or failure of a merger depends on some factors, and in this article, I will be sharing five simple tips for successful mergers and acquisitions.

  1. Keep the deal fair for all parties involved

No matter how much you try to understudy a company you want to acquire, no matter how much information the transition team hands over to you during the closing of the deal, there’ll always be a time when you’ll need to reach out to the former principal for a company to make inquiries. Sometimes, these inquiries may be necessary to make critical decisions that affect the company. At this point, if the former principal feels shortchanged or they’re not satisfied with the transaction, they will not be responsive to your needs and questions. To avoid this kind of hitch that can negatively affect the acquisition or partnership, it is necessary to ensure fairness for all parties involved in the deal.

  1. Cash out on your good reputation

A good reputation is a currency that you shouldn’t hesitate to cash out on whenever you want to close a new deal. When you have a new acquiree with whom you’re looking to close a deal, set up a meeting with them and one or more of your previous merged groups. Your new acquiree will feel more confident to hear what the other people you’ve dealt with have to say about you than what you have to say about yourself. Those people’s opinion holds a stronger influence on new prospects and could be the gateway to closing a deal faster and easier. This is another reason why you must ensure honesty and fairness in your deal so that your previous acquirees will have positive reviews to give about you.

  1. Assure the Corporate Structure and Staff of Security

One mistake that has negatively affected many mergers and acquisitions is sacking old staff and management teams and replacing them with new ones. Most times, this approach is always counterproductive and throws the merger towards a downward spiral that takes a long time to recover. To avoid this, make sure that the interactions between your team and that of the acquiree don’t swing in the “us. Vs. Them” direction. Instead, use inclusive language like “our” and “we.” Say things like “our clients,” or “we are all together.”

Assure the existing staff of the company that their jobs are safe, the organizational structure remains the same, and that you’d like to see them give in their 100% dedication to service as always.

  1. Get Support from Insiders

One of the key secrets of earning trust and being able to close a deal effectively is to have an insider who supports your vision for the company. As an outsider, it may take you too much time to convince the principals to agree to the merger or acquisition. They may take an exhausting amount of time doing their due diligence, and this may slow down the transaction. Having a trusted insider, on the other hand, makes the path smooth and easy for you.

By recommending this point, I do not in any way intend to promote manipulation of deals and dishonest lobbying. Instead, acquirers should build trust and relationships with some staff and managers of a prospective company before they approach them with a deal. If you have proven your reputation and integrity to these people, they won’t mind chipping in a word for you that’ll help you close the deal faster.

  1. Know when to walk away

It is true that most of us have a winner mentality and we would always want to close every deal we started, but it is important to know when to walk away. A deal doesn’t necessarily need to be bad before you walk away from it. In fact, sometimes, you need to walk away from a good deal. If you realize that you can’t really bring any value to a company you’re trying to acquire, there is nothing wrong with walking away because you wouldn’t want the business to end up being worse than its current state. You can also walk away from a deal if you realize that the organization doesn’t fit into your business principles or that your ethics, principles, and corporate culture don’t align with what’s obtainable in the company.

Final Thoughts

The success of mergers depends a lot on the level of cooperation between the partners. The partners need to keep this relationship flourishing forever if they want to achieve success in their business. For mergers, on the other hand, it is necessary to have a great relationship with the former principal, especially during the transition process. It is also essential to close the deal in a favorable state that leaves all parties satisfied. This is because you may need to refer back to your acquiree when you run into some challenges that would require their wealth of experience with the business.

Are you looking for someone to buy your company, or are you seeking a partner with whom to merge your business? Reach out to us,

www.olmec-consulting.com

A business consultant for SME

BAsed out of Dubai UAE

we help Buyers nd sellers of business to have a meeting of minds

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