The number of mergers and acquisitions (M&A) has reached an all-time high. Examples include Nokia-Alcatel-Lucent, Heinz-Kraft and Shell-BG to name but a few. And the trend is set to continue. Ernst & Young’s Capital Confidence Barometer, conducted in April 2015, shows that 58% of international directors expect their company to actively pursue acquisitions within the year. What is the best way to ensure a successful M&A transaction? It calls for Interim Management.
Advice #1: Surround Yourself With the Right Partners
An M&A transaction is a powerful source of leverage for business development. Knowing how to carry one out is it is a completely different matter. The first step is to surround yourself with the right advisers. If your budget allows, you can choose from among:
- Investment banks, which advise major companies. Their highly qualified teams offer comprehensive services that range from market research to closing M&A transactions.
- Accounting and auditing firms, which very popular among SMEs. Their auditing expertise field makes them a valuable asset in any M&A.
- Law firms, which are key players throughout the entire transaction. They are involved in the auditing, deal structuring, negotiations, and closing of the deal.
If your budget is more conservative, you can opt for:
- Conventional commercial banks, which are highly valuable to SMEs due to their knowledge of local economies and to the fact that they can provide much-needed equity investment to
- Business networks, such as chambers of commerce, provide advice on how to successfully execute M&A transactions in their area. However, the quality of their services may vary.
- Independent advisers, which may be just a single Although they can be an interesting option, you would be well-advised to check their references before making any decisions.
Advice #2: Set Up Your Technical Integration Team
Technical integration is a step that takes anywhere between 3 and 6 months and that requires a strong team. A merger requires harmonization of a number of tools and processes, such as the new form of corporate structure, governance of the newly created entity and collective bargaining agreements.
Advice #3: Establish a Provisional Timetable for the Transaction
It may seem obvious, but a timetable is just as essential a factor in successfully executing an M&A. Changes in a company’s culture can take anywhere between 12 to 18 months before being adopted throughout the entire company. So it is important not to rush things.
Advice #4: Measure the value of your company
A successful M&A is built on proper asset valuation based on a benchmark and a financial valuation.
Advice #5: Communicate internally as well as with your partners and your clients
Proper communication helps the ecosystems of both companies to move forward and get through what may be an unsettling transition period. Communicating on the project’s success with the public is also necessary. Explaining the reasons for the M&A and showing the success of each step in the process will lend credibility to your new corporate message. Internally, employees often feel worried about their jobs and careers after a merger. It is vital that you be reassuring and take the time to explain the reasons for the M&A. Finally, interim management is a key component of a successful M&A. Senior interim managers can help you to successfully manage such complex projects.