Acquisitions can be a vital component of business strategy. However, for an acquisition to truly add value to a business, it must fulfil a range of requirements.
The best acquisitions are those which display ‘The Four Corners of M&A’ – generating economies of scale and synergy, whilst also allowing the buying company to keep pace with emerging trends and increase shareholder value.
In the event that a deal fulfils each of these requirements, it becomes very much a question of timing – namely, whether the buying company is fully equipped to undertake an acquisition. The following questions must be asked, before actively pursuing an acquisition:
- Is there a robust growth strategy in place with well-defined objectives and timescales? It is easy to be swayed by the attractions of an acquisition; however, it is essential that any potential deal supports the original goals of the organisation and won’t throw these off course.
- Is the entire organisation (HR, IT, finance, management, systems and processes) adequately structured to facilitate a successful merger with another company? Can it support new staff and systems?
- Are the capital investment requirements and funding facilities realistic? These details must be carefully examined before launching into an acquisition project, so as not to fall at this hurdle further down the line.
- Does the company have the skills to target suitable acquisition targets? And does it possess the technical expertise to structure an effective deal?
- Is the target list concise and does it only include companies that can truly generate value? This will allow you enough time to engage properly with quality targets and to sweetheart them where necessary.
- Is there a strategy in place to support the smooth integration of a new business, including its employees and other assets?
By actively asking yourself these questions and understanding ‘The Four Corners of M&A’, you’ll reap the benefits of a successful acquisition to complement your business strategy.
Are you thinking about buying or acquiring a business? Call us today to speak to one of our award-winning consultants
on: 01737 240 888 or alternatively fill in our contact form and a member of our team will get back to you.