When it comes to mergers and acquisitions, many people are seduced by the thought of instant success and encouraged to pursue transactions over expensive dinners with high-flying merchant bankers. Now while M&A can provide unique growth opportunities, it has plenty of pitfalls. Executing a successful transaction requires careful planning and much hard work. It’s this failure to adequately appreciate and plan for the work involved that leads to the high failure rate of transactions. According to a 2012 Forbes article, M&A activity has an overall success rate of about 50% – basically akin to the toss of a coin. A pretty scary thought when you stop and think about it.
To help stack the odds in your favor, we provide the following services:
Ensure the proposed acquisition makes strategic sense and that you have the wherewithal to execute and deliver the underlying economic model before you enter into the details phases of the transaction. Understand your proposed acquisition price and what needs to be delivered in order to justify your price. Too many deals ultimately crash simply because of irreconcilable price expectations that in many cases have been know from the very start.
We can help you understand which items are critical for a successful transaction outcome and what your position on these should be. Whether it’s the desired ownership percent, the role of local brands or who manages the day to day business, you need to align on a firm position before you enter the negotiations. Failure to do so may result in you compromising on key items simply because the other side was better prepared.
Due Diligence/External Advisors
Carrying out a comprehensive due diligence exercise is no simple task and invariably leads to business disruption and stress. We can help you prepare for your due diligence exercise and manage the demands of the various external advisors that will invariabley become involved. As well as managing the actual process, we will review and summarize the various output reports, separating the critical from the mundane so you remain meaningfully informed.
Transaction Negotiation & Contract Review
Successful negotiation requires a rare combination of active listening while at the same time presenting your position in a firm but respectful manner so nobody loses face. We have the experience and expertise to represent you either as the lead negotiator or your key go-to person in the various rounds of face-to-face discussions which will invariably take place. Following the negotiations, we will actively work with the lawyers to draft and review the various legal agreements to ensure all key provisions and concessions so diligently negotiated are accurately reflected.
One of the leading causes for M&A’s high failure rate is the inability to correctly plan for and execute the post-merger integration. This is not overly surprising as the acquisition details are normally restricted to a small team of senior leaders whilst the post integration work requires the involvement and coordination of a much larger group who are already busy doing their “day jobs”. Benefit from our experience in this area and ensure you have a detailed post acquisition plan ready to execute before the transaction closes.