Key Components of a Strong Merger & Acquisition

There are numerous reasons you may want to merge your business with another. Perhaps you want to expand your business to new geographic markets or clientele with which the prospective merger company has already established themselves. Maybe it is a financial necessity, or you simply believe that the practically instantaneous growth produced by a merger or acquisition will help your company achieve new heights and fulfill your goals.

Whatever your motivation, you cannot simply pick any random company out of a hat and try to make it work—you have to find the right match. Mergers or acquisitions are no easy task, and the larger your company the more complex it will be. Below we’ve detailed some of the key components required for a strong and effective merger.

1) Communication

As in most aspects of business, communication is a vital key to ensuring your merger or acquisition goes smoothly and is the right move for both companies. You need to have completely open and direct lines of communication with the key players from the company with which you want to merge. This is one situation where you absolutely cannot afford to have lines get crossed or have a misunderstanding about each other’s expectations. Be clear and forthright about what you want and expect, and build your new relationship on a foundation of complete honesty.

2) Win-Win

The merger or acquisition needs to be a win-win for both companies. For your merger to be effective, both sides of the transaction need to be improving their situation in some way. One-sided M&As will leave at least one of the critical parties unhappy with the outcome, which does not bode well for your future together. Think of your merger as a relationship—both sides need to bring something to the table that makes the other party better.

3) Shared Vision/New Identity

Early in the process you need to establish with your counterparts in the “target” company what your soon-to-be combined business’ new identity will be. You might not be able to practically maintain the identities of both companies.  Likewise, it may be practically difficult to completely integrate one company’s identity into the other.  What will your vision be for your new company? If you and your counterparts do not agree on a vision for the company’s future, then the merger/acquisition may not be successful post-closing. Your vision and new identity should be very clearly defined and planned before moving forward.

4) Well-Planned

Speaking of planning, this is another vital component of any merger or acquisition. You cannot just leap into the merger and expect things to work themselves out. Quite frankly, you need to clearly plan out many of the critical details of the transition. Whether you are the buyer, seller, or another major player in the transaction, Doida Law Group can help you plan and execute every step of your transaction.

5) Integration

You may need to establish an integration team entirely dedicated to executing and implementing the merger. There will be many major changes for the employees from both companies, and you need a strong and well-executed integration plan to ensure the transition goes smoothly. There is a great deal to think about with regard to how you will integrate your new identity and culture and you need managers who can focus on this while others focus on continuing the normal focus of your business.

When properly planned and executed, a strong merger and acquisition can take the involved companies to heights they never dreamed of. But getting there can be an incredibly complex process. Please contact the Doida Law Group and let us help you with every aspect of your merger.

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