Succeed in your merger-acquisition with an Interim Manager
A corporate merger is a major financial transaction in which one company buys another. These types of movements energize local and global economies. It also leads to profound financial and social upheavals. Successful merger acquisition is in fact an ambitious, complex and sensitive project. It is therefore essential to limit all risks. Entrusting your M&A (Mergers & Acquisitions) project to a seasoned expert such as a Transition Manager is a wise decision.
The M&A panorama
In 2018, nearly 50,000 corporate merger operations were carried out worldwide. The sum of these transactions approached 4,000 billion US dollars. This was the third highest value since M&A was measured (1980). Within this market, France represents a dynamic and attractive country. It weighs on average 15% of European M&As.
However, the current context is not conducive to the success of a merger acquisition . Brexit, terrorism, social movements or the deterioration of the natural environment disrupt the visibility of entrepreneurs.
Reasons for mergers and acquisitions
So, what are the reasons leading leaders to trust these mechanisms more and more? A fairly simple view!
- Synergy: 1 + 1 does not make 2, but 3.
- Diversification: because you don’t put all your eggs in one basket.
- External growth: to “buy” turnover without producing too much effort internally.
- Profitability: increase its commercial power in order to renegotiate its purchasing conditions and reduce its operating costs.
- Leadership: buy out your competitor to be the market leader.
The risks to consider
Successful merger acquisition is not obvious. External growth is not always there. Companies affected by mergers and acquisitions underperform by 1% (2017) to 3% (2018) compared to other companies (1).
This result can be generated by multiple factors associated with one of these phases:
- Targeting the wrong take: buying a company for the wrong reasons and not generating any growth with that company.
- Paying the wrong price: carrying out an incorrect or incomplete financial audit; not evaluating the investments to be made; not verifying company compliance in all areas.
- Social due diligence: an essential exercise to identify human and social risk factors.
- Poor communication: these periods are subject to all rumours, even the craziest ones. You have to keep control of communication with teams, suppliers, customers and institutions.
- Sailing blind: it is essential to set a route plan; quantified objectives must be set after the study phase; validate the project and create a steering committee that regularly measures the progress of the implementation.
The contribution of an interim manager
Few companies have the in-house human skills to develop and complete a merger and acquisition . The professionals capable of directing these major projects have a particular profile. They have appropriate training and have already successfully completed such transactions in France or abroad. They know the many and latest regulations in force, the standards of protectionism, geopolitical concerns, financial and non-financial risks…
This is the case for managers in transition in our firm. They intervene very early in the project and lead the mission to its conclusion.
Reactive Executive introduces you to executives experienced in this type of operation. Do not hesitate to contact us.