Every every day, there are stories in the financial press about merger and acquisition deals in SMEs and major corporations. While boosting revenue and gaining exposure to new clients are usually the main reasons behind these deals, it is vital that any business looking to get into the M&A game has a well-thought out strategy for ensuring that the deal is successful.
A successful M&A is a complicated process, and the end result depends on many factors that both parties have to take into consideration. A high-quality management group is crucial to ensuring that your company is able to successfully navigate through the M&A process. External accountants and consultants can enhance the credibility of your M&A strategy if you enlist their assistance.
The first step is to perform an in-depth review of the financial health of your business. This involves analyzing profit and loss statements and cash flow, analyzing the debt/equity and determining whether you have enough cash flow to pursue a M&A transaction. The financial health check will identify any differences between your Management Accounts and Statutory filed accounts, which could cause confusion for buyers.
The cost of integrating both companies is an additional factor. It can be physical costs like merging offices, systems, and employees or human capital costs such as calculating the costs of benefits and compensation programs. By involving experts in human capital early in the process, you can effectively assess these costs and incorporate them into your purchase price negotiations.