By: Taylor Bauer
It can be daunting to begin the process of a merger, especially because these sort of deals often come after months and months of work. A few things can get you through the tougher times, and even help you avoid some roadblocks.
Be certain about the culture fit. Each company will have a nuanced operation style and personality. The important thing is to assess whether their respective cultures will mesh. The finances of a deal are important, but the culture of the two companies can make or break the deal. Managers of an acquired company will inevitably feel a loss in autonomy, which can be a shock. Will the values of the company mesh well with the values he or she learned from the previous company to quell these feelings, or will they be contrasting and lead to tension and mediocre performance? In the end, a company is an organism made up of its employees. A company with happy employees who feel as if they belong has a much better shot at being successful than one with disgruntled and disenfranchised employees.
Perform thorough financial analysis. This may seem like an obvious step in any combination, but it is too important to leave out. In many instances, one party may become too enamored with the upside of a deal and place too much faith in the perfect situation occurring. Worst case scenarios should always be considered to correctly weigh risk. Financial analysis including the usage of basic financial statements, key financial ratios, and valuations of the individual company and the market are crucial to M&A success.
Develop a method for sourcing deals. This tip is especially important for buyers, as a quality system for finding potential acquisitions could prevent them from ending up in an auction for the company. Competition is bad from a buyer’s perspective, and it will only drive up the price. Tap into networks, reach out and build a stream from which potential targets can flow. Ideally, sellers should know of your interest in buying before they are even looking to sell.
Set deadlines and stick to those deadlines. As stated before, the M&A process is intense. Setting tangible goals and deadlines will help the entire team keep track of the deal’s progress and continue with a purpose in mind. Long hours, complicated models, and miscellaneous other issues are stressful, but letting deadlines pile up can derail an entire deal. Concluding the deal will keep getting pushed back, and this will either cause more unnecessary stress, or one of the companies may find a reason to walk away, and the deal will be over. Neither of these situations are ideal and can be avoided by setting and sticking to deadlines.
All of this can be overwhelming to tackle on your own, which is where SA Capital Partners comes in. All of these tips are helpful, but decades of experience can do a lot more for you when the going gets tough. Let the brunt of the uncertainty be solved by the team at SA Capital Partners, because when the going gets tough, knowledge and expertise can come in handy more than you’d ever imagine.
About SA Capital Partners:
SA Capital Partners is an innovative financial services firm that specializes in mergers & acquisitions advisory and capital raising for lower middle market businesses. We aspire to give all the tools necessary to complete any transaction. SA Capital Partner’s financial services industry specialists provide comprehensive, integrated solutions to banking transactions. Our breadth of services and industry knowledge allow us to understand each client’s unique business needs. Our goal is to make all financial services available to every small business.