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At the end of the day in mergers and acquisitions, there’s a disappointing result. Why?
In essence, the reason is quite simple: Buyers fail to accurately assess the two cultures.
They must be compatible and ideally both are healthy companies. The only exception would be if the acquiring company is particularly healthy. (Scroll down to the Coach’s Corner to see articles that address these issues.)
Let’s focus on you, the buyer. In order to successfully acquire another business, you must have strong qualities.
First, accurately assess your capability to buy a company and the potential return on your investment.
You must develop a template for success. Due diligence and advance planning are required on multiple fronts.
This means you must have the right people, sustain a stalwart spotlight on your stakeholders and the marketplace, and implement strong internal controls.
Right people
Having the right staff means you having the right people to pull off the merger successfully.
Before you acquire the business, you must evaluate its talent and prepare to retain the right people.
When applicable, you must recruit the right people externally.
Keeping a spotlight on stakeholders and the marketplace
Avoid any potential chaos that can result from a chaotic merger. Be prepared to profitably navigate your way through the merger.
A word of caution: If you’re too preoccupied in completing a deal, it’s a potential recipe for miscommunication. That can lead to misunderstandings.
So, spotlight your stakeholders and the marketplace. This means maintaining strong relationships with your customers and strategic partners.
You must understand what they value and perform accordingly.
If you don’t, you’ll be giving your brand power away to your competitors. They’ll be like packs of jackals eyeing their prey – attenuating your brand and stealing your customers.
Your precautions should anticipate new obstacles and respond quickly.
As early as possible, start by engaging your stakeholders personally; that means face-time with effective messaging.
Then, reiterate your messaging in writing.
Should you experience a decrease in sales, go into action. Notify your key talent about your concerns and head off the troubling signs.
Implement strong internal controls
Make sure your company’s operations are stalwart before entering any deals.
Do your homework about a target company before beginning any talks.
Focus on your acquired company’s finances and associated details such as its commitments, customers, contracts, sales, research and development and other projects.
Before reaching a deal, establish a clear structure for roles and responsibilities.
After making clear what your expectations, priorities and consequences are, get an agreement from the target company before closing.
Assign your trusted finance people to closely monitor the priorities and performance of goals.
Implement all necessary improvements and explain why you’re taking remedial action. This will prevent future surprises.
Establish a mentoring program between your most-trusted talent and the new company’s employees so they follow your business philosophies and practices.
Regularly ascertain flash reports and take any necessary steps for correction.
Emphasize transparency. Make certain all players concentrate and converge on details and policies for success.
From the Coach’s Corner, here are relevant sources of information:
If Mergers & Acquisitions Tempt You, Consult Your HR Pro First — There are five pitfalls to avoid in mergers and three A’s needed for success. If you’re contemplating a merger, be very careful about your human capital – whether you’re in government, a small business or a global company. Investment bankers salivate over the prospect of new mergers, but senior finance executives need to listen to human resources experts to insure success.
Like Creating a Healthy Salad, M&As Need Key Ingredients — Mergers and acquisitions (M&As) might seem simple in small business. But for success in either small or big business, M&As are a complex process. They require the right ingredients much like building a great-tasting, healthy salad.
Buy a Business to Grab Market Share but Study 10 Financials — One of the fastest ways to grow is to buy a competitor or to acquire another business. But you must exercise due diligence in 10 steps.
Strategic Planning Lessons: Why United Airlines Was Forced to Merge with Continental — United Airlines (UAL) was forced to merge with Continental Airlines because of anemic strategic planning. It was a $3-billion merger with about 1,200 jets and more than 86,000 workers. Sadly, after eight decades, UAL’s logo is history. The Continental logo remains. The merger entailed a mega review of 2,000 policies and procedures.
A company is known by the people it keeps.
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