Five Key Elements of an Effective Merger and Acquisition Strategy

Posted by Rock LaManna

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If you’re putting together a Merger and Acquisition Strategy, I believe there are five key elements involved in making it work.  But the most important factor is generally overlooked by business owners, and it’s why only 25% of M&As succeed.

Before we get to this overlooked factor, let’s touch on why M&As do succeed:

1. It’s a win-win situation for both parties.   You want to walk away from an M&A as a wealthy individual.  But you don’t want to do it at someone else’s expense.  As soon as you realize that success depends on both parties coming out on top, the better your M&A will be.

2. The two companies have thought it through.  I’m probably preaching to choir on this one, because if you’re reading my posts, you probably believe in researching a topic and understanding it before you act.  Many owners don’t.  They just shoot from the hip and hope for the best.

3. The transition team has been established.  I can’t emphasize enough how important a transition team is for your M&A.  Without the right mix of people in place, even the can’t-miss merger is destined to fail.  Why?  Because so much of your shared success is dependent upon the long-term success of the company.  Without the right team in place to cover all the bases, you’ll be in trouble.

4. A contingency plan has been created.  Everything in life goes exactly according to plan – especially when it comes to business.  Right?  Wrong – absolutely wrong.  You can’t be expected to know how the wheels might come off the biz, but you do need to figure out how you’ll respond in the event they do.

5. A clear vision for the company has been established.  I talk a lot about how the financials of a deal will dictate whether or not the M&A is worth pursuing.  But you also have to look at it from a long-term strategic position.  Does the M&A align itself with where you see the company in 10-15 years?

These five elements are essential for the success of an M&A, but the real success factor is something different.  And it’s all dependent upon you, the business owner.

The only way numbers 1-5 from above will work is if you possess the critical factor in an M&A:  Leadership.

I’m not talking about management here, I’m talking about being a leader who will guide your team and company through what could be a very rough and stormy sea.  

I’m talking about having the will to persevere.  To adapt.  To drive your company to success.

Why do so many M&As fail?  It’s because owners and CEOs spend so much time on 1-5 that they forget to lead their teams.  It’s nothing flashy or complicated, but it is incredibly hard.  It’s also the secret to an M&A’s success.

Photo by: squidish.

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Topics: M&A