Making a business acquisition is a quick way to grow your company. But this type of transaction also carries several risks. In order to succeed, careful preparation is required. In this series of 4 articles, learn out about the important steps to take before, during and after an acquisition.
Even after the deal goes through, the work is far from done. Now it’s time to make the transition, carefully integrate employees, suppliers and customers, take charge and start to pursue your plans.
The goal is to accomplish all of the above without disrupting the company you just acquired. To succeed, you need to have a transition plan and avoid making unnecessary changes that may destabilize the new company.
There’s more to an acquisition than just taking possession of another company. There has to be a genuine integration, and the process must be led by the leader of the firm. An integration plan, which includes a timetable and precise objectives, should be prepared and then carefully implemented.
The leaders and executives who are put in charge of the integration must have clear and measurable objectives. Progress reports are essential—they will allow the company to closely follow the integration process and make changes if necessary. To increase the chances of success, the leaders in charge of the integration could be rewarded as specific goals are reached.
If synergies were forecast in the acquisition plan, they should be achieved without delay. Since the selling price was likely influenced by these savings, not putting them to use may render the price paid too high, and turning a profit from the transaction more difficult.
If the buyer already has a company, the mere fact of having acquired a firm operating in the same sector is often a harbinger of success.
The goal is to keep what gave the company its vitality (and thus its value) in the first place: its employees, it customers and its suppliers. The acquisition must be perceived as good news—an opportunity to improve business relations or the work climate. This is why it’s essential to minimize the period of uncertainty that inevitably follows an acquisition by quickly proceeding with the changes necessary to integrate the new company.
The success of the transition begins with integrating the employees and leaders who will be part of the new company. A change of ownership is usually a source of concern for employees. It’s critical to reassure them as soon as possible about their future to get them onside. Without this, they may leave the company, not knowing what to expect from their new employer, or even be recruited by competitors who want to take advantage of this period of uncertainty.
You must quickly identify the leaders and executives who will form the management team. To maintain motivation and ease concerns among them, they must be told without delay who will be forming the new leadership. The same goes for personnel. If changes must take place, it’s advisable to make them as quickly as possible.
All these measures, if properly planned, explained and executed, will reassure the troops, quickly set the tone and motivate new employees to contribute to the success of the integration and the acquisition.
Any acquisition, regardless of how strategic it might be, can become catastrophic if the purchase price is too high. Therefore, it’s in the acquirer’s interest to make sure the asking price is not greater than the value of the company, and that it fits within the buyer’s budget.
For an acquisition to be successful, the acquirer must be able to make a difference. That means having a sufficient understanding of the target company’s business field to be able to assume the leadership and know exactly what must be done to grow the company.
An objective analysis of the target acquisition is absolutely essential, and this can only be accomplished through an in-depth due diligence process. First, make a list of the main features you must review and of the critical information you need to get a realistic picture of the company. Initially, you can focus on the fundamental characteristics that led you to choose the target (for instance, make sure you will indeed control a particular patent if that was your reason for attempting to acquire the company). You can always tackle secondary issues later on.
An acquisition process is long and comes with many challenges. You constantly have to restart the machine, and keep everyone involved motivated and focused—and that includes yourself—to reach your goal.
Acquiring a company is a question of teamwork, and you need to be surrounded by the right people. Your accountant, your lawyer and your banker will all play important roles in this transaction. And a financial institution is not just a source of financing. It can contribute in a multitude of ways to the success of the acquisition by accompanying the acquirer throughout the process, being present at meetings with the various parties, by coordinating and by supporting the other players in the deal.
Once the acquisition is concluded, you must quickly take control while making sure not to disrupt operations. If your plan involves letting go of certain personnel, do so promptly. Then, reassure suppliers, customers and employees so that they don’t start looking elsewhere. The value of the company you have just bought depends in large part on its list of customers and the skills of its employees. You do not want to lose either one.
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