Business-Minded Legal Solutions

Seven signs of a successful merger or acquisition

Business mergers can be hugely beneficial for the companies involved. Still, like any business partnership, it has to be the right fit for it to work. Common examples include local rivals joining forces or similar businesses in different markets. The benefits can include cutting overhead by pooling staff and gaining the expertise needed to grow or attain resources.

Rather than dwell on the red flags to avoid, let us focus on the desirable traits to look for when approaching another business about a potential merger or acquisition. One where combining the two can be a competitive advantage in the marketplace.

  1. Strategic alignment

A clear strategic alignment between the two companies is essential. Both should have similar goals, missions and visions, which will help in a seamless union that spurs synergies and enhances the value beyond the levels of combining the assets. In other words: Rather than 1 + 1 = 2, it’s 1 + 1 = 3.

  1. Complimentary strengths

While we just said that the two entities should have similar visions, they should each offer unique complimentary assets that benefit the other. For example, the products or services they offer may have an overlapping customer base.

  1. Cultural fit

Some tend to underestimate the importance of company culture until they come across a dysfunctional one. Companies with similar work ethics, values or organizational structures are much easier to unify successfully. A positive outcome internally often translates into business success in the marketplace.

  1. Collaboration and communication

Collaboration among each company’s personnel is essential for moving forward and coming together as a unified whole. Collaboration occurs when companies have open and effective communication.

  1. Strong leadership

Successful executives and management have a clear and practical approach. This leads the entire workforce through the merger process. There will still be bumps, and effective leadership can navigate these challenges by involving only necessary staff and making decisions based on feedback.

  1. Due diligence

Each company needs to do thorough due diligence, so there are no major surprises after closing the deal. Along with financial matters, there may be regulatory and legal issues or other risks.

  1. Positive market response

A positive customer response is essential for customer-facing businesses. It is also important that industry analysts and investors are happy with the merger.

Work with a team to minimize risks

Every major business deal comes with risk. It is essential for each company to work with a team that can structure the deal, recognize potential problems, and provide counsel based on extensive knowledge and a proven track record.