Five tips for a successful merger and acquisition deal

Merger and acquisition deals can mean the growth or death of a business. These tips can help to mitigate the risks.

Merger and acquisition deals can bring life to struggling businesses. Conversely, a poorly structured deal can result in a business' ultimate demise. Navigating through these deals and finding the best fit for your business interests takes vigilance, patience and an eye for detail. Missing a single issue could make the difference between success and failure.

Those who are attempting to navigate these tumultuous waters can take steps to better ensure a successful deal. This is true whether looking to sell or purchase a business. Some of the more common tips include:

  • Put together a business strategy. What are your business objectives? Keep in mind that most businesses grow successfully with a number of small acquisitions. It is not always wise to put everything towards one large acquisition. When a proposal looks promising, review the offering and put together a final acceptance price. Have this final figure in mind during negotiations and stick to it.
  • Take steps to protect yourself. Businesses that are considering a deal should take steps to protect proprietary information. It is important to put together nondisclosure or confidentiality agreements prior to disclosing confidential information. This can help protect this information in the event the deal falls through.
  • Do not downsize due diligence. A publication by the National Law Review notes that businesses considering an acquisition should "leave no stone unturned." The process is complex. Some examples of areas to cover include a careful review the business' organization to make sure it is in good standing. This can be done by requesting a certificate from the Secretary of State. Also review revenue streams as well as liabilities.
  • Review real time updates. We live in a digital age. As such, companies looking to purchase other businesses expect to be able to review many areas of the business' finances in real time at any time. Businesses looking to sell should be able to provide such access, and businesses looking to buy should expect to be able to review these numbers.
  • Keep culture in mind. A publication by Pepperdine University analyzed the impact of business culture on the success of a merger and acquisition deal. Ultimately, researchers found that a deal's long-term success often hinges on successfully integrating business cultures. The odds of a successful integration can increase by taking the time to assess the work environment. This can be done through surveys and meetings. It is often wise to begin this process before the deal is complete to better assure that the transition goes well.

Although these steps can help to better ensure a deal goes well, they are just the beginning. Business leaders entering these transactions may also have concerns regarding business valuations and financing the deal. As a result, it is wise to seek the counsel of an experienced business attorney. This legal professional can help guide you through the process, from structuring nondisclosure agreements before the negotiations begin to reviewing final documentation to help better ensure that your business interests are protected.