Mergers and acquisitions are options for growing your small business, but both are complex business transactions. Mergers and acquisitions can feel like a line of dominos, with one misaligned piece causing the whole deal to collapse. With proper planning, however, a merger or acquisition can boost your revenue.
A business merger, the joining of two separate businesses, delivers higher revenue through cost savings. The two merging companies share resources like manufacturing facilities or office space and save expenses allocated to accounting or human resources. An acquisition, when one company purchases another, delivers significant growth because the acquiring company is buying revenues and reduces the overhead required to run two distinct organizations.
Tips for Successful Mergers and Acquisitions
Whether you’re pursing a merger or an acquisition, the best outcome starts with developing a strategy for examining characteristics of the deal such as location, product assortment, marketplace conditions and corporate cultures.
Ensuring your strategy addresses these five focus areas can make your business merger or acquisition successful.
• The game plan. Defining your objectives early in the process provides a road map to guide decision-making during the business merger.
• Financial liquidity and stability. Evaluate cash flow and working capital to make sure you can handle the investment associated with the deal.
• Leadership team. Team leaders driving the transition will set the tone and the direction for the deal. Having leaders from both entities brings understanding of the culture and employees to the discussions.
• Divisional teams of experts. Pulling together sales, operations, finance and marketing along with legal and investment support is key to getting the details right.
• Virtual data room (VDR). These online intranet storage areas useful for managing all the documents developed and reviewed during a business merger or acquisition. VDRs are proprietary to your deal, allowing access to authorized team members.
If you’re examining potential merger or acquisition opportunities, talk with our team at Value Capital Funding. We’ll stand with you throughout the deal to make sure you have the support you need to close the deal.