How to Succeed in Your Merger-Acquisition Transaction?

It is estimated that 70-90% of mergers and acquisitions fail (according to figures reported by the Harvard Business Review). These large-scale operations are indeed very delicate to carry out and many factors can jeopardize their smooth running. The resistance to change, a drop in activity growth, budget overruns, strong cultural differences, etc. Consequences can then be very serious and threaten the survival of the company.

To maximize the chances of success of your merger project. It is important to adopt a rigorous methodology and know some good practices.

Assess risks and anticipate future challenges

Before even signing the transaction, it is essential to carefully assess. The risks associated with such an operation, financially, but also human, legal, and commercial.

For this, it is necessary above all to clearly define the objective of the music. It intending to diversify the activity? As part of an internationalization project? To strengthen its competitiveness in the market. Or simply to grow your business and increase your turnover?

In a second step, it will be necessary to carry out meticulous due diligence of the targeted company. It analyzes commercial positioning; the local market; supply, demand, and competition; the growth rate of the company; the quality of the products or services; communication strategy…

This acquisition audit will validate the compatibility between the target company and the acquirer and measure. The potential of the merger-acquisition project, as well as the strengths, weaknesses, areas for improvement, and possible future challenges…

Properly negotiate the terms and conditions of the merger-acquisition

A second decisive step in the smooth running of m &a services (Mergers and Acquisitions). The negotiation phase, and the choice of the most suitable type of merger: total takeover; partial assignment; merger-absorption; merger by annexation; fusion-creation; joint venture…

To secure this transaction, it is essential to be accompanied by legal, financial, and tax experts (notary, lawyer, accountant, etc.), able to define the most favorable terms and conditions of the contract.

Ensuring employee engagement and overcoming resistance to change

As in most restructuring projects, resistance to change is one of the major obstacles, and one of the most frequent causes of failure.

With a successful M&A advisor, it is therefore essential to ensure employee commitment. The local manager’s mission is therefore to transmit to the teams the final vision attached to the merger project. It must also present, in a transparent manner, the strategic issues, as well as the benefits at the financial, commercial, and human levels.

Line managers must listen to the fears and doubts of their employees and reassure them effectively. It will also be useful to identify the key collaborators, essential to the smooth running of the merger acquisition, and to ensure their complete support for the project.

In addition to the employees, it will also be necessary to involve all the stakeholders in the merger project (building the loyalty of customers and business partners, reassuring investors, and shareholders, discussing with suppliers and service providers, etc.).

Facilitate integration into the new structure

Integration is the most delicate and riskiest phase in an external growth operation. A rigorous strategy must therefore be put in place to ensure the proper integration of the absorbed company and to guard against the risks of loss of growth and disengagement of employees.

To ensure a harmonious and successful synergy, it will first be necessary to ensure that employees are well prepared for the changes to come, and to encourage them to be adaptable and open-minded.

Indeed, this type of profound transformation upsets all benchmarks and often represents a real challenge for teams who must adapt to a whole new ecosystem: the style of management, the working atmosphere, the method of organization, the tools and practices, the corporate culture and its values ​​can turn out to be radically different from one organization to another.

To facilitate this transition, it will therefore be necessary to ensure close and transparent communication, and to carry out regular individual exchanges with employees, to ensure that they understand the strategic orientations of the new entity.

Call on an interim manager to make your merger acquisition a success

Given the risks, challenges, and complexity of mergers and acquisitions, it is particularly wise to outsource your M&Aoperation to an experienced expert, such as an interim manager.

At Freeman Logan, an M&A advisory firm, we identify, among our network of 2,000 talented executives and managers, the profile best suited to your needs, and specialize in the management of mergers and acquisitions operations. Thanks to his long career, his sector know-how, his neutral outlook, his human qualities, and his outstanding managerial skills, this high-ranking leader will be able to secure the transaction and ensure the success of the merger project.