There are always curve balls with mergers and acquisitions, but in our experience the ones that have gone the smoothest have been those that have been well planned.
So here are our top tips on planning your merger or acquisition and how to avoid the pitfalls.
1. Plan, plan and then plan some more…
We can all get carried away when a deal on paper looks good. However, as accountants and advisors we have to reiterate the importance of due diligence. Whether you are looking to sell your business, merge with another or acquire a business, creating a customised due diligence check list to ensure that you cover all the issues that are important to your existing business and strategy.
Here are some Do's and Don'ts when looking to complete a transaction:
DON'T do it alone.
DON'T jump at the first offer.
DON'T hold for a marginally better offer.
DON'T rely on technical reporting solely by the seller.
DON'T leave your advisors in the dark.
DO have a plan, scope it right and make it detailed so it fits with your current business strategy.
DO compile a target list.
DO have a back-check on information about the business you're planning to buy.
DO know when your position is strong / weak.
DO have an exit strategy if the deal falls through.
DO engage capable and experienced M&A advisors early in the process and retain them till the end.
DO make sure you gain access to the financials of the other business as soon as possible so you identify any issues and work through them early.
Reviewing and planning your merger and acquisition is not a task to be done solo. Make sure you bring in all of your experts for this one. We recommend as a bare minimum that you include your accountant, tax specialist (if not covered by your accountant), lawyer and all the internal people in your business that need to be involved such as the executive team.
If you work in a highly specialised industry it may also be prudent to bring in an industry expert who can provide a more industry based opinion. This will help you be more objective when analysing the transaction.
3. Central Headquarters
Create a centralised spot virtually that can be the headquarters for your planning and reviews. This can be a secure ‘off site’ spot where both parties can share and review documents and work on them collaboratively.
4. You need time and resources
In order for your merger or acquisition to be successful you need time. These things are extremely time consuming. From doing your due diligence to negotiating leases with landlords or suppliers. There are lots of small details that together add up to create a successful commercial outcome for you. You need to allow the time and resources for this to happen otherwise you might find it isn’t as profitable as what you had anticipated. Some companies have a dedicated team that handle their mergers and acquisitions so that they can focus on every element rather than being distracted with the day to day business operations.
Alternatively you can seek the help of a firm such as Azure Group who can help you project manage the transaction. We help lead your business towards achieving successful outcomes by developing strategies for your project and managing complex negotiations. We are involved at all stages of a deal, including preparation of transaction documentations such as Information Memorandums or Prospectus documents, valuations and due diligence, optimal business structuring for a transaction and developing short or long term planning and strategy for your business exit or succession. You can find more information here.