4 Tough Merger And Acquisition Strategy Questions CEOs Need To Ask

Posted by Bob Baker on Fri, Jul 13, 2012 @ 09:17 AM

Is your company ready to jump into this complex undertaking?

Author: Bob Baker

In today's business climate, growth through mergers and acquisitions is becoming an increasingly popular option, as companies address the financial, operational and "go to market" costs and benefits of a “buy over build” decision.

Strategic mergers and acquisitions can deliver many benefits to both the buyer and seller.  A well-integrated and comprehensive M&A process can provide a quick route to business renewal in many areas:

  • The key to a smooth merger lies in four questions…New products
  • New applications for existing products
  • More customers
  • New market segments, brands
  • Market repositioning
  • New/added energy
  • New ideas that may come with...
  • New talent
  • Added credibility in a new market sector
  • New technology
  • Tax gains
  • Cost reduction, synergies
  • Vertical integration

And more.

But, the merging of two or more organizations is complex and risky, and the most successful transactions follow a structured and disciplined approach, with clear strategic objectives, detailed implementation plans, and a relentless focus on timely and effective integration Despite all the good reasons to sell or purchase, M&A has a massive failure rate, quoted at 70 to 90 percent by study after study.

Process and organization alignment are critical factors in successful merger and acquisition transactions enabling companies to maximize realized value.  To increase the chances for success, companies must have a fundamental understanding of the reasons for seeking a merger or acquisition, as well as a handle on the processes and infrastructure needed to maximize the opportunity for success.

Before jumping in, CEOs must ask:

  1. Have we clearly defined our M&A criteria?
  2. Do we have the internal processes, skill sets, resources and tools necessary to maximize value from an M&A?
  3. How will we handle transaction support, valuation, due diligence and negotiations?
  4. Do we have a well-defined business integration process to ensure synergies are realized?
  5. Bonus question: How will we measure and evaluate M&A success?

If you've answered “not exactly” to any of the tough questions, a seasoned business consultancy can bring the needed structure and clarity to your M&A objectives. Contact the M&A professionals at JC Jones & Associates and get experience on your side. Visit our website to learn more about our services and expertise or call us at (877) 899-4072.

Tags: Bob Baker, business transition, business restructuring