The Art of Successful Mergers and Acquisitions – A Process Guide

Much money is spent on acquisitions, yet study after study shows a high failure rate. The reason is simple: CEOs buy the wrong companies for the wrong reasons, pay too much for them, and fail to integrate them effectively.

Mergers and acquisitions can be an effective tool for strategic growth if appropriately executed. 

Define Your Strategy

Companies can gain market share through mergers and acquisitions, expand their product lines, and access new markets. However, the merger and acquisition process needs to be carefully planned and carried out.

Create a concise strategic framework and utilize it as the foundation for decisions. It will ensure that the M&A Consulting supports and complements your company’s strategic objectives and critical competencies.

Be aware of your limits, and don’t get caught up in “deal fever.” It is common for private equity parents or enthusiastic executives to acquire a company without considering its ongoing operations and how the deal will be integrated.

Conduct Due Diligence

A merger or acquisition is a big deal fraught with legal and financial issues. However, by following best practices, parties can increase their likelihood of negotiating a successful M&A deal that benefits all stakeholders.

Business leaders should develop an M&A blueprint that lays out critical competitive information, including the company’s best value-creation levers and the capabilities it needs to pursue them. The blueprint can be a regularly updated, publicly disseminated document or an agenda item at M&A and corporate-strategy meetings.

The M&A blueprint should be tested and retested as the landscape changes. For example, a market assessment may reveal that digital cosmetic sales are growing faster than nondigital ones.

Plan Your Integration

Effective communication before, during, and after an M&A transaction is critical. Use a cross-functional project structure with overlapping members from target identification/negotiation, due diligence, and integration planning to expedite information handoffs.

Build plans that capture M&A value creation and synergies and link them to executive performance goals. It will help to ensure that guiding principles and synergy targets are prioritized and delivered on time.

From merging service operations to integrating pay systems, culture clashes, misaligned information systems, and more can scuttle even the best M&A deal. To mitigate these risks, manage the M&A process cradle to grave with a formal integration playbook.

Communicate Your Strategy

A well-defined M&A strategy can make the difference between success and failure. However, executing an M&A strategy can be difficult.

It requires the commitment of a senior leader, corporate-strategy executives, and business-unit leaders. The M&A blueprint should include details on critical factors such as deal sourcing, due diligence, and integration planning.

This plan should be communicated regularly, ideally as a standing agenda item in M&A and business-unit meetings. It can also include periodic progress presentations led by a different team each month to help the plan feel less top-down and more like a collaborative effort. It can be a great way to build morale and show progress.

Implement Your Strategy

Successful M&A requires a structured approach. Leaders must articulate how M&A will deliver on specific themes and objectives underlying their overarching corporate strategies. They must also build a high-level business case and preliminary integration plan for each deal they pursue.

M&A can help companies diversify their products and services, enter new geographic markets, achieve economies of scale, gain access to new talent and resources, and more. By managing the M&A process cradle to grave, you can ensure your company gets the most value from its investments. Effective communication throughout the process can also improve your M&A outcomes. M&A is not for the faint of heart.

Monitor Your Integration

Achieving the strategic benefits of M&A requires effective integration and communication throughout the process. With careful planning, M&A can offer many key advantages, including diversification, economies of scale, and access to new markets.

To maximize M&A success, companies should use a blueprint. It should be led by an executive or business unit leader and be supported by corporate strategy and M&A executives to ensure that critical factors relating to deal sourcing, due diligence, and integration planning are always in focus.