Every day, there are stories in the financial press about merger and acquisition deals in SMEs and large corporations. While boosting revenue and gaining exposure to new clients are usually the main reasons behind these deals for a merger, it is imperative that any business wishing to get into the M&A game has a well thought out strategy for ensuring that the deal is successful.
A successful M&A involves a complex procedure and the end result is dependent upon many factors that have to be taken into account by both parties. A well-run management team is crucial to ensuring that your business is able to successfully navigate the M&A process. A trusted external consultant and accountants who can assist in this process can also enhance the overall credibility of your M&A strategy.
The first step in the process is to conduct an extensive financial health check on your business. This includes looking over the statements of profit and loss and cash flow analysis, analyzing debt/equity ratios, and determining if you have the funds to pursue an M&A deal. The audit will highlight any differences in your Management Accounts and Statutory Filed Accounts, which can cause confusion for a potential buyer.
The cost of integrating both companies is another important factor. This could include physical costs, such as merging systems, offices and employees. Or it could be in the form of human capital costs, like the calculation of the costs of compensation and benefit programs. Getting human capital experts involved early in the process will allow you to properly assess the costs involved and incorporate them into your negotiations on price.
Connect with us