M&A: How to manage an acquisition (M&A).

Acquisitions, more generally known as mergers and acquisitions (M&A), originate from varying factors. In some cases, these are normal phases expected during a company's life cycle, in others, they come from less predictablereasons.

January 25, 2020

Achieving a successful outcome from an M&A negotiation can radically change the destiny of a company, and this is far from simple.

One thing is certain, if you are in the position of those who want to acquire, invest or respond to an offer (even foreign), it is essential to understand that you are starting ‘a new project within the organization’ and as such it will need to be sufficiently managed and resourced.

Operators in the M&A sector, including investment funds, venture capitalists and mediators, know this only too well. In order to invest in the most profitable opportunities and facilitate the conclusion of an agreement, they develop internal ad-hoc groups for the segments of the market they are interested in investing in.

The method of looking at an M&A operation as a project helps to have the right mindset and approach right from the beginning. It may seem like a small detail, especially for board members and senior management of banks, insurance companies and multinationals in general who may be used to managing these negotiations, it is certainly less so for other types of businesses who may be at their first experience with an M&A operation.

Here are the main benefits of adopting a ‘project driven’ approach:

Planning the operation allows you to ‘dilute’ the decision in stages, allowing management to have the right time to evaluate the investment
Starting a business due diligence analysis allows you to assess the value of the business and to verify the information relating to the business in order to determine whether to proceed with the purchase.
Activating management on issues relating to margin or performance has always had a positive impact on business strategy, so it will be of value even if the negotiation does not succeed.
Exposing the credibility, sustainability and future profitability of the company always leads to the discovery of the real strengths of the company, very important for example during negotiation of the selling price.
An assisted M&A operation allows us to build a climate of mutual trust between the players involved, essential in creating a common ground in order to share information which can facilitate the objective of reaching an agreeable conclusion.

Such an important assessment needs to be conducted with access to the right skills and experience so as to avoid making costly mistakes or miss valuable opportunities during the negotiations.

Aside from a few simple cases, it is always advisable to obtain advice from an expert before commencing the operation.