Carrying a wide range of strategic opportunities and growth prospects for the company’s shareholder value, mergers and acquisitions can simultaneously cause devastating effects for their participants. So, how to choose the right time for a deal and assess its cost and risks?
M&A in modern business
In the corporate environment, mergers and acquisitions are quite a common phenomenon. They allow companies to combine the resources of several companies, consolidate management, on the one hand, expand the area of influence in the market, etc. But at the same time, you must not forget that all such transactions have their characteristics and nuances and carry risks for everyone involved in their conclusion.
M&A deals are an effective tool for a business development strategy, carrying many different options and opportunities. However, at the same time, only a small part of the initiated transactions brings the desired result. In most cases, in the course of transactions, their value is “destroyed” due to errors in the management process.
Mergers and acquisitions: how to achieve the desired result?
There are the following recommendations that will help the company to orchestrate a productive M&A transaction:
- Coordination of efforts of all participants in the transaction
The M&A process involves the involvement of the project team from the side of the buyer and the seller. These teams may include specialists of various profiles: financial consultants, lawyers, auditors, tax specialists, representatives of senior management and technical personnel of the companies participating in the transaction, and other specialists. The actions of all involved participants must be integrated into a single management process following a clear plan, with minute-to-minute coordination.
- Efficient management of procedures and process of transaction implementation
The transaction implementation project is not a linear process and represents a complex of procedures, works, and documents that must be continuously managed. The points of the plan for the implementation of the transaction can have four or even five-digit numbering, and the process itself, including the implementation of the necessary preparatory procedures, can stretch for years. Any little thing can contribute to the destruction of the cost and the success of the entire project. Therefore the most important tasks of the consultant are the correct placement of accents and minute-by-minute control over the transaction process.
- Organization of the competitive process
One of the main factors in maximizing the valuable value for the transaction initiator is the presence of competition between potential counterparties in the transaction. The emerging competitive environment strengthens the negotiating position of the transaction initiator and expands the set of options and alternatives for the implementation of the transaction. This approach allows you to continue negotiations with the participant who offered the most favorable conditions, using the presence of a competitive environment as a factor of influence in the negotiation process while not excluding the possibility of returning to negotiations with other interested parties in case of failure.
- An objective view from the outside
The expediency of engaging a financial consultant to support the transaction is in his objective view of the situation from the standpoint of an outside observer and, at the same time, a professional. The task of the consultant is to impartially assess the factors of business value, taking into account, on the one hand, the unconditional imperative of maximizing the value for the client from the transaction and, on the other hand, real market conditions, the prospects for the emergence of interest in the transaction from market participants.