Is an Acquisition the Right Strategy for Your Business?
Merging with or acquiring a like-minded business offers opportunities for accelerated growth. This method isn’t just for big businesses, either.
Getting new customers isn’t the only way to grow a business. Merging with or acquiring a like-minded business offers opportunities for accelerated growth. This method isn’t just for big businesses, either. Small businesses can see serious improvements with the right acquisition strategy. Here are five steps for ensuring a winning deal for all involved—clients, employees, and both companies.
Know Your Deal Partner
Competitors can become allies through the M&A process. It’s helpful to share a lot—way more than you’d normally feel comfortable disclosing to a competitor. This establishes significant trust, and produces opportunities for joint work. You need to know the business you’re getting involved with, and you need to feel comfortable that it’s a good cultural and financial fit.
Timing is Everything
Factors well beyond just those within the businesses can affect deals. Choose the timing of your deal wisely, maximizing competitive opportunities and taking advantage of important market shifts. For instance, a newly released technology may temporarily diminish interest in an older option, so companies heavily invested in the older technology may wish to delay a merger.
Discuss More Details Than You Think You Need To
The most significant work happens well before the merger occurs. You need a clear road map for the merger. You must discuss things in way more detail than feels necessary. Don’t take mutual understanding for granted. Don’t assume that a single term means the same thing to two parties. Err on the side of excessive explanation and painstaking definition. Then memorialize everything on paper. Your agreements are only as strong as the contracts on which they are memorialized.
Cultural conflicts are a key source of difficulty following a merger. This is why it’s so important for your teams to get to know one another from the get-go. This gives you a preview of how the transition may go, and an opportunity to head off any cultural conflicts before they escalate out of control. Be open and prepared to answer questions from the very beginning. This prevents the rumor mill from answering questions or you, and inspires confidence and trust in everyone involved in the merger.
Understand That Your Role Must Shift
Whether you’re a new owner or have run your business for decades, you’re probably accustomed to doing things a certain way. A merger means that your role must shift. That can be an adjustment. You’ll need to master the fine art of knowing when to step in and when to butt out. Many of the most common issues associated with a role shift can be handled ahead of time, by hammering out clear agreements and gaining a keen understanding of how you and the other side will work together. Nevertheless, it’s important to be prepared for a bit of chaos. Transitions, even good ones, can be hard after all.
No matter your goals, M&A may help you achieve them. No matter which side of the negotiation table you’re on, working with a skilled M&A expert can help make the process easier and more profitable for all involved.