Even if everything looks good on paper, any potential takeover deal can go horribly wrong. Therefore, it is essential for business owners to follow certain procedures to ensure that the proposed deal is a good deal for all parties involved.
To help, 13 members of ukbusinessupdates.com Business Council share essential steps business leaders must take during the acquisition process. Read their recommendations below to understand why these actions are so important and how they can protect the business.
Members of the ukbusinessupdates.com Business Council outline critical steps for business leaders during the acquisition process.
Photos courtesy of individual members.
1. Do thorough research
Thoroughly research the company you want to acquire. Look beyond the balance sheet and, if possible, speak to employees who work there who are not C-level executives to get their take on the company. Google the company to see if there are any complaints or public comments that you should be aware of from past or current employees. – Cindy Diffender, Orion Haus Homes and Hotels Inc.
2. Make sure you understand the other company
Before making an acquisition, make sure you understand the business thoroughly. This includes customers, partners and suppliers – in fact all stakeholders involved. An important part of the process is to conduct a thorough assessment – ideally with an outside agency – of all aspects of the business, especially finance, to determine the pros and cons of the acquisition and provide a calculated, data-driven to make a decision. – Saravana Kumara, kovai.co
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3. Rely on experts for help
Today there are many people who have made acquisitions and are willing to share experiences. Let the lawyers, appraisers, accountants, planners, etc. provide their technical services. The biggest reason for failure is a misfit of cultures and personalities. Take the time to really understand if the cultures and personalities are a good fit based on experiences with all parties. – Jerry Cahn, Brilliant old
4. Place value on cultural alignment
No matter how small the deal, you need to make sure your cultures are aligned. During the deal process, I would really dig into a topic that you and the other team disagree on so you can see how you deal with conflict together. Both parties should also have aligned goals. – Eric Berkley, Berkley
5. Set expectations
Many deals do not go through due to poor terms with term sheets and misunderstandings about the scope of projects and assignments. This sentiment is true, especially for service industries where expectations must be managed from initial engagement to acquisition to avoid losing customers. – Keith Goldstein, Verify Me, Inc.
6. Maintain open and direct communication
While there is no one-size-fits-all formula for making acquisitions successful, communication is key. It is essential to maintain open and direct lines of communication at every stage of the process. This ensures that both parties are clear about their expectations and can explore gray areas in the most transparent way possible. – Ran Ronen, like AI
7. Carry out the valuation thoroughly
It is critical to assess the value of the target from the beginning of the negotiations. This includes identifying any alternatives to structuring the merger and selecting what works best for the company’s objectives. It will help you make better decisions throughout the process. – Aidan Healy, Healy Consultants Group PLC
8. Conduct a cybersecurity risk assessment
A cybersecurity risk assessment is essential to a successful M&A transaction, whether you are the buyer or seller. As a buyer, you need to know if there are additional costs required to run a business. As a seller, assessment allows for pre-sale remediation rather than profit attribution. – Brian Edelman, FCIA
9. Investigate Every Risk
It is necessary to investigate all risks responsibly. You need to weigh all the pros and cons carefully and understand whether it is worth the risk. You need a team to help you evaluate everything because there is a lot of work to do. Only with decent work before the deal itself can you develop an acquisition plan that will allow you to get the most out of the business at minimal cost. – Mark Snel, Polestar plumbing, heating and air conditioning
10. Focus on qualitative results
We need to focus on qualitative results, which rely heavily on ‘soft assets’ such as culture, mindset and synergies. Quantitative diligence, including deal economics and finance, is important, but the impactful work is to discover what’s not on paper. These elusive ‘what if’ and ‘how shall we’ debates and outcomes are critical to the longevity of the combined companies. – Tej Brahmbhatt, Watchtower Capital
11. Stay focused and steady
There’s an old saying that it’s not a foregone conclusion until the check is settled. Therefore, do not overreact to incoming good or bad news about an acquisition-in-progress. Instead, keep a controlled attitude and wait to pop the champagne until the check is cleared! Your team will follow suit in how you handle the acquisition process, so keep it cool and steady throughout the journey. – David Lenihan, Tiber Health
12. Do Your Due Diligence
Due diligence is critical in predicting the success of an acquisition. Learning as much as possible about the deal and developing a well-defined plan reduces uncertainty and increases investor confidence. – Veena Jetti, Vive Funds
13. Be prepared to run away
One of the challenges in the acquisition process is not pulling out of a deal after you’ve worked on it extensively. Don’t be afraid to walk away if the evidence-based merger or acquisition doesn’t seem appealing. The reason due diligence is done is to let you know what you are buying. – Marilisa Barbieric
