|
 
| |
Mergers, Acquisitions and Divestitures are complex processes, requiring an
understanding of valuation, strategic fit, company cultures, tactical
integration, capital market financing, due diligence and deal structure
considerations.
In fact, over 50% of all mergers and acquisitions fail. How can a company
help ensure an improved likelihood of a successful transaction?
Finding the right opportunity is a critical component of any acquisition. In
most cases, the "perfect" deal does not exist, and it becomes incumbent on the
acquirer to understand the limitations of any transaction and put the necessary
protections in place to help assure future success. Proper due diligence becomes
a key component of the overall assessment process, and is a foundation for
supporting any value proposition.
The determination of overall value is impacted by a number of factors beyond
historical and pro forma financials, including potential internal synergies that
may be generated. Cultural integration issues can either support the realization
of these synergies or derail them, and understanding likely cultural impacts is
critical. This is particularly valid when the seller is intending to remain with
the company post-close and maintains a key role in the larger organization.
In many cases, the price of an acquisition is less important than the deal
structure considerations. Who is financing the opportunity, and is it being
financed via some form of debt (including seller notes) or equity? If the seller
is staying with the organization, do they have performance incentives that are
consistent with the overall goals of the larger organization? Is the transaction
an asset purchase?
Tactical integration is often a less considered, but equally critical
consideration of any transaction. Are operating systems being integrated onto a
single platform? Are "best practices" being instituted? Do existing platforms
possess the necessary flexibility to incorporate the numerous idiosyncrasies
that are bound to exist in a merged environment?
An understanding of these issues and more leads to a significantly increased
likelihood that a particular transaction will be successful long term.
|
