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What can be done to improve your chances of acquisition success

Published by Concentra

Search the internet for acquisitions” and you will find a wealth of information on the subject. It is a hot topic with advice from all of the investment banks, strategy houses, consultants and the like. You will find the reasons they are undertaken and the reasons they fail. You will find it is generally accepted that there is a high chance of failure. Why then do companies enter into this world where in all probability the end results will not be as envisaged at the outset and what can be done to maximise your chances of success?

I have been working within the IT SME market for the last 25 years and have been actively involved in 6 acquisitions both from a purchaser’s and seller’s perspective. My experience suggests that this market is poorly advised and prepared in how to undertake an acquisition and what is involved. All too often SMEs will not have a corporate finance department who have done multiple transactions before. The task will be left to one or two of the key Executives who may not have undertaken this type of project before and therefore are inadequately prepared for what is likely to be a significant investment for the business. The following is a personal view on some of the tips to consider so that you are not part of the failure statistic.

Acquisitions are undertaken for any number of reasons but generally to:

Assuming you have identified a strategic need for a transaction and a suitable target the steps you take next are critical in ensuring that you have the best possible chance of making the acquisition a success.

My experience suggests that getting a complete understanding of the data at the outset is critical. Think of an iceberg most of it is hidden so too with the key data you need to get you hands on. Whether this is the corporate, statutory, financial, market, product, customer, supply chain, HR, IT, etc it is key that you are able to obtain relevant reliable information and then analyse it. The due diligence process will help you to assimilate the raw information but do you have it all and have you analysed it appropriately? Do you understand how it impacts your current corporate environment as well as the target’s? In effect are you making key decisions based on insight from well grounded factual information? Never has “Caveat Emptor” been more important than before the acquisition.

However, this is just the beginning, as most acquisitions fail after the deal is completed and attention to post acquisition data is critical. How do you get it, analyse it and then act on it? Are things on plan? What adjustments should be made? Who is going to do them?

Whilst most of what I cover seems obvious and just common sense it is important to ensure you consider each part carefully so you don’t end up making a expensive or potentially catastrophic mistake.

Aspects to consider in detail are:

Concentra has a unique combination of skills and technology that can help you succeed. The Business Intelligence teams have in depth experience in data analytics, whilst our consultants have worked extensively on post merger integrations and how you can drive value from these activities. Our amazing product, OrgVue, will help you to understand the people dimension so we can support you along every step of the way.

In summary there are many good reasons to undertake acquisitions but they can be undone by inadequate planning and by focusing on the wrong issues. Don’t’ be caught up in the excitement of the deal and live to regret your decision. Be sure that you don’t become one of the statistics and prepare well and be prepared to say no, even at the last stage, if it does not feel right.