Understanding M&A Investment Banking and How to Succeed In It

Merger And AcquisitionsMergers and Acquisition, popularly known as M&A, is a term that is used to refer to a combination of two businesses. It works by giving sellers an opportunity to share in the rewards and risks that come with a new business, and at the same time helps buyers who want to achieve certain goals an alternative to organic growth.

Simply put, a well-executed M&A investment creates a win-win situation for both the buyer and the seller by:
– Eliminating competition by buying a competitor through a process called horizontal integration
– Helping achieve supply chain efficiency through buying a supplier in a process known as vertical integration
– Allowing time to market new products and channels

Nevertheless, you need to know that not all M&A is successful. According to a study done by Deloitte reveals 70% of mergers fail due to poor integration.

This tells entrepreneurs that having a properly planned integration plan is not optional, but something that should be at the top of their to-do list.
But what if you don’t know what a proper integration plan is, but you still want to get into an M&A investment? Should you proceed and accept failure?

Your business is doubtlessly one of the most critical assets you own. Therefore, taking care of it should be your full-time job. Getting into a beneficial merge is one way of ensuring your business is protected from potential collapse. To do these, you need to take note of the following tips:

1. Know what you want to get from the deal

Whenever you want to get into a Merger and Acquisition, you need first to do proper due diligence and be crystal clear on what you want to achieve at the end of the day.

This might seem very obvious, but many business owners say they joined mergers without doing proper research, and they failed terribly in no time. Don’t be the one to give this kind of testimony while you can prevent it from the outset.

Make sure that before you strike a deal with another business, you can explain what the merger is all about, its sources of synergy and anticipated value, and you can explain the post-execution without any problems.

As a rule of the thumb, remember that if a business you want to merge with doesn’t have a common view of goals and objectives when going into due diligence, know that the integration will not bear any fruits; hence you will need to look for another plan.

2. Get the right people to represent you

One of the biggest mistake you can make when getting into a merger is thinking that only the senior management in your organization can represent you in the boardroom. Identify key representatives across your business, and lay their work out from the onset. Some of your representatives could even include customers, existing staff, acquired staff, regulators, and/or suppliers. For the best results, make sure you engage them early enough.

3. Come up with an implementation plan

Never proceed with integration if there is no prior implementation plan. Otherwise, you will only plan projects in mind, but they will never be implemented because there will be no budget for it. Have a clear plan that is communicated and agreed upon by everyone.

4. Finally…never overlook cultural issues

When you get into an M&A, it is not always about business. Culture, emotions, and feelings will have an impact on the business. Address cultural differences and how to harmonize them in your implementation plan, and ensure you do things that win hearts and minds. Ultimately, productivity will increase, and the M&A will certainly bring desirable results.

As long as you invest time, resources, get your people together without delay, and follow the above tips, there is no reason why your integration should fail. Good luck!

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