19/05/2021

Merger and acquisition tips for beginners

business acquisitions

Mergers and acquisitions (M&As) create huge potential for any business, expanding your customer base, gaining new staff with varied skillsets, and accessing funds for new development. They also help to reduce competition and can help with organic growth and expansion.

However, for someone who has new to M&As, the prospect can be daunting. Here are all the top tips for beginners so that you can successfully navigate a transaction through to completion and watch your business benefit.

 Allocate an M&A Advisor

For large transactions like this, you cannot complete it alone. Appoint an experienced M&A advisor who can help you navigate through the process and guide you as the transaction progresses. Business acquisitions are life-changing and are not cheap, so going it alone is only asking for trouble.

 Leave Offers on the Table

If completing your first M&A deal, it can be tempting to jump at the first offer. Ideally, you want to have multiple offers on the table before making a final call on which to accept. The more offers available to you, the more likely it is you will secure a great deal that is hugely beneficial. However, while doing this, be sure not to hold back for a marginally better offer. The perfect deal may never come, so if you have several near-perfect offers on the table, take one.

 Remain Calm

Acquiring a business is no easy feat, and there are frequent ups and downs throughout the process. Therefore it is essential to not allow yourself to get too emotionally caught up in the process, which can lead to rash decisions or even deals falling through. Stick to the facts and remain level headed with a belief that everything will work out.

 Determine Your Position

To get a deal in place that is representative of your company’s value, you need to have valued your company correctly. Get this crucial step wrong and you could chase off potential deals or accept an offer that is way below your company’s true value, potentially ruining your business and career. While business appraisal services are a must, also be sure to have conversations with your actual consumers to help get a well-rounded view of your company.

 Learn to Negotiate

At the end of the day, a successful M&A is about compromise. You need to consider all aspects of the deal when negotiating. Can you play multiple bidders off against each other in your favour? Do you or the buyer want the sale more? Can non-financial aspects be exchanged? Whenever you do negotiate with the other side, be sure to manage the interactions professionally and form a good relationship.

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Scott Dylan

I’m Scott Dylan, Fresh Thinking Group Founder and Partner. I oversee the strategic direction of the company, which I created to help, acquire and invest in both distressed and viable companies together with helping businesses improve their business processes and setting strategic directions.