Four Steps for a Successful Acquisition

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M&A is an effective way for companies to grow. However, the process of acquiring is rife with potential pitfalls that can cause acquired businesses to lose their value. Making sure you follow these four steps to an acquisition that is successful can help you avoid common pitfalls and make your next acquisition a winning strategy to grow.

1. Plan your purchases.

One of the main causes of failed acquisitions is poor planning. By creating an acquisition plan from the beginning, you can ensure that your company is maximizing value and staying on track with the objectives of your M&A strategy.

Typically, this involves creating an inventory of M&A target companies and then narrowing that list through the use of search criteria. These criteria could include industry sector valuation, deal value, market share, and operational scale. Corporate development teams have access to numerous resources to determine M&A target companies, including online sources like DealRoom and LinkedIn trade publications, industry associations and databases of investment firms and private equity firms.

2. Establish a team to lead the M&A process.

It is essential that management teams form an organization headed by an executive at the top who can oversee the M&A from start to finish. This is essential to ensure that the strategy behind the acquisition does not get lost and that the integration process goes without a hitch. It’s also important to have experts in human capital on the M&A team to calculate the cost of benefits and compensation, and to quantify actuarial estimates of pension and other financial obligations.