Did you know that 40% of all mergers and acquisitions (or M&As) fail because they are not managed and monitored properly? And yet get the process right and they can revolutionise your company’s fortunes and take you way ahead of your competitors.
It’s a complex operation, because not only does it involve a rigorous health check of your company’s finances and ability to raise additional capital before merging or taking over, but it’s then about picking the right target at the right time and price and – this is vital – having the right “on message” managers and professional financial advisers (such as ourselves at CBW). We don’t just walk away once the deal is done but help you make your new financial systems work, closely monitoring your short- and long-term performance. The yardstick to success is seeing lasting gains one year after the deal and, 12 months later, seeing your original goals met – have you actually increased market share, entered those new lucrative markets, offered better value for money, expanded your product range?
What gives me the best chance of a successful mergers and acquisitions deal?
Strategic business planning. Ask yourself how you are going to nail that perfect deal. History shows companies that undertake a string of M&As are more successful than those attempting one-offs. They know more than anyone the value of clear priorities and aims and an understanding of how to achieve them. And for less experienced companies this stresses the need for experts on board – meaning people who will stick with you in the vital first few months of a new M&A. At CBW London, we ensure you have every financial contingency covered to allow flexibility when shortlisting viable M&A targets. In fact, we have boosted our credentials in this field by being awarded Corporate Chartered Financial Planners status, a national scheme recognising our commitment to delivering the right results for clients, including M&A success.
How can I raise the necessary funding?
Mergers and acquisitions often require considerable capital fundraising. An exhaustive financial review of your business and its tax efficiency is essential to show if you can handle the budgetary pressure of an M&A and to highlight your other fundraising options. Find out if you have sufficient liquid assets, such as cash or blue chip shares, which can easily convert into funds. If yes, you may then be free to restructure your business and release value and extra funds by, for instance, restructuring your shareholdings. If no, we can advise you on debt and equity capital funding options.
What do I need to ask to track down the ideal M&A?
Keep an open mind about the type of personnel and, more importantly, the company you seek. A key issue is integration, a much under-estimated factor which if not handled well can torpedo a deal. What about staff? Who goes? Who stays? What are their terms and conditions? Company philosophy, working practices, computer systems, financial infrastructure? We can help you with business planning and forecasting, working out income and expenditure potential, and help you focus on grey areas highlighted by our due diligence team. Take integration seriously and you’ll be far more likely to pick the right target.
How do I know the value of a good M&A deal when I see one?
Due diligence, valuation and investigation is the short answer. Exhaustive checks by corporate finance and forensic accountants from a practice such as ours will uncover any flies or tarantulas in the ointment and give independent, accurate and timely valuations of companies of all sizes across all sectors. You have to be thorough, using due diligence checks on not just finance but on people, the law, technology and your target’s operational efficiency. Focus on the positive parts of a target you’d like to keep and let those determine what needs due diligence treatment. It’s also well worth checking out the company’s customers to give you a head start in maintaining future relationships.
What’s the key point to remember?
Bring your staff, directors and shareholders with you. A successful mergers and acquisitions need you to be a strong decision-maker and lead a well-informed and motivated M&A team backed by hand-picked outside consultants to help advise and negotiate. Use specialists like us at CBW to keep key financial and other management staff informed and included at every step of the way. Your fellow directors and senior managers have to buy in to any M&A – otherwise cracks will appear and the original aims of the project plus large capital sums will disappear into the ether. It will all have been for nothing. As a consultancy CBW can act as the mortar to hold the team together at every step of the M&A process – from preparation and due diligence through to closure and lasting success two years on.
Mergers and acquisitions are proven business growth strategies, but to ensure you have the best chances of success, talk to a CBW M&A specialist today to understand how they could help you structure the best deal for your business.