M&A (mergers and acquisitions) deals present great opportunities for businesses to grow and scale. However, not all M&A deals lead to success. In fact, a poorly executed M&A strategy may cause a downshift in either the buyer’s or seller’s revenue and growth potential.
Here, we’ll discuss how the best M&A strategies can fuel your company’s growth and how to implement them.
1. Create an M&A blueprint
M&a integrations present different opportunities for growth.
Acquiring another company can either be coercive or friendly. A coercive acquisition is when the acquired company isn’t keen on proceeding with the deal but moves along anyway for financial or other reasons. On the other hand, a friendly acquisition means that both the buyer and the seller are 100% on board with the deal.
Based on your goals, you can create an M&A blueprint to decide how things will go in the future. With an acquisition, the acquired company may simply operate independently, while a merger means the two companies need to work hand-in-hand to shape the future of the new company.
At this stage, having a solid due diligence and integration plan in place can be highly rewarding.
2. Keep your eyes focused on the value drivers
A successful M&A strategy is all about defining the value that your business brings to the table.
When you’re fully aware of your company’s value proposition, you’ll be able to better assess which acquisitions will bring additional value to your customers. It’ll also make it easier for you to define the value the deal brings to both the seller and the buyer.
Developing an M&A strategy requires knowing what makes your business successful now and what acquisitions can add to make the business even better in the future.
You should also figure out the downside and upside of the M&A deal. There will always be downsides, but you need to ask yourself whether the deal’s potential benefits outweigh the risks.
Will the deal cause any significant changes in either business? Are the seller’s and buyer’s goals aligned?
3. Conduct a smooth and secure due diligence process
Most companies involved in M&A deals offload the whole due diligence process to third-party advisors, raising security and confidentiality issues. These advisors don’t evaluate organizational fit for mergers or acquisitions. However, they will provide detailed reports on risk and financial management, as well as legal matters.
Virtual data rooms (VDRs) are designed to help you conduct due diligence transactions securely and efficiently. With deep encryption, granular access permissions, and a monitoring dashboard, you’ll be able to control and monitor everything happening in the due diligence process.
Some of the best data room providers include iDeals, Brainloop, and Intralinks, but we’d recommend reading a round-up data room review to find the solution that best suits your business.
4. Develop an implementation plan
Creating an execution plan for the M&A deal starts with setting timelines, benchmarks, and accountability. Ownership for each individual task is crucial here. Without developing a roadmap for the M&A deal, tracking progress will be harder.
Online data room software makes assigning tasks and due dates much easier. It creates ownership for all the people involved in the process.
It’s also important to keep an eye on the organization’s culture. M&A deals are almost always alarming for a company’s employees and can affect their morale.
5. Leverage the power of talent
Conducting an M&A deal is a lot of work. As a result, larger companies have dedicated corporate development departments that handle M&A deals from A to Z.
However, for companies operating on a smaller scale, this isn’t the case. Usually, the work is assigned to the CFO, which isn’t the right way to conduct an M&A deal.
It requires resources that assess deals in a step-by-step process to support the decision-making strategy. Otherwise, the M&A deal will probably fail.
An electronic data room streamlines all the transactions in M&A deals by allowing different parties to collaborate and share documents efficiently, thus requiring fewer resources than traditional M&A operations.
That was a quick overview of some robust M&A growth strategies.
With the help of virtual data room services, M&A deals can be conducted strategically by facilitating access to critical documents and reports for more accurate decision-making.
Investors will be able to access information conveniently, and the seller will know which investors opened which documents, providing more in-depth insights into how investors interact with their company. Some of the best virtual data room providers offer solutions that cater to each individual company’s needs.