5 Steps For a Successful Acquisition

Acquisitions can appear to be an easy task on paper, but ensuring they work over the long term requires a strategic approach and a thorough preparation. Many entrepreneurs are unhappy with their latest acquisitions if they don’t follow the tried-and-true steps to prepare to execute and integrate an acquisition.

The first step is to create an acquisition strategy. The most successful buyers have clearly articulated specific ideas for value creation prior to negotiating a deal, such as expanding into international markets or completing gaps in portfolio. They have an associate in the business and a team that will conduct the features and functions of DealRoom analysis and negotiations and a plan to close the deal.

Valuation and Deal Structuring

The next step is to determine the price at which the purchase should be made. This is done by comparing valuation methods with the financial records of the company. Examine the cash flow of the target’s predictability, market position and systematization. Additionally, it is important to determine if the deal is an asset or stock deal and understand the tax implications of each.

Negotiation and Closing

Throughout the whole process, it is important to pay attention to the customer. It is also essential to avoid slicing corners or ignoring negative findings that could affect the transaction.

Lastly, it is important to have a knowledgeable team to oversee the M&A process. This is especially important during the due-diligence phase, when it’s easy to overlook important details. Communication with employees is also essential. This is an extremely stressful time for the employees of the company that was acquired, so it’s important to communicate clearly and transparently.

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