The use of mergers and acquisitions (M&A) to accelerate growth is a well-established business strategy, and offers a company the potential to enter new markets, access top talent and reduce costs. By merging with or acquiring another firm, a business can often achieve these goals more quickly and easily than with a solo expansion. These are not automatic outcomes however, and sometimes an M&A deal will not deliver as expected or can bring more complexity than anticipated.
To improve your chances of success there are three fundamentals you must focus on:
- Is the target company a good fit in terms of size, industry and culture?
- Getting the valuation right
- Planning and implementing a solid integration strategy.
Of these the first and third are most important. If you overpay it will not wreck the deal, but selecting the wrong target and a poorly prepared and/or poorly implemented integration plan will put the future success of your deal in jeopardy.