5 Steps For a Successful Acquisition

Acquisitions might appear like a piece of cake on paper, but making them work over the long haul requires a strategic approach and a thorough preparation. If they don’t follow tried-and-true steps to plan, implement and integrate a deal, many entrepreneurs are dissatisfied with their latest acquisition.

The first step is to develop an acquisition strategy. The best buyers have well-articulated, specific value creation ideas before they sign a contract – such as expanding into international markets or completing portfolio gaps. They have an associate in the business and a team who will conduct the analysis and negotiations and a plan to close the deal.

Valuation and Deal Structuring

The next step is to determine the purchase price by comparing valuation methods with the company’s financial records. Take into consideration the target’s cash flow predictability, market position and systematization. Also, it is vital to know whether the acquisition is an asset or a stock deal and to understand the tax implications for each.

Negotiation and Closing

Throughout the entire process, it is essential to remain focused on the needs of the client. Also, it is essential to avoid cutting corners during due diligence or ignoring negative findings that could affect the transaction.

Additionally, it is essential to have a well-trained team to oversee the M&A process. This is particularly true in the due diligence phase where it is easy for the details to be ignored. Additionally, communication with employees is crucial. This can be a stressful time for employees of the acquired company and it is important to openly communicate and offer transparency.

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