Have you decided to acquire a business? An acquisition is a great strategy to secure growth in your company. This is likely an opportunity to increase market share, streamline operations, and expand your audience. With successful mergers and acquisitions, your company can get bigger, stronger, and more efficient at delivering value to your customer.
A business acquisition can go sideways very quickly, though. A lot of mergers and acquisitions may experience more struggle than is necessary by lowly-calculated valuations. As a purchaser, know what you’re buying. Look at the details. Consider why a company is being sold. A lot goes into a valuation. The less time you spend here, the more financial backing you’ll have to complete the acquisition with the fees, debts, and liabilities involved.
Here are some helpful tips to manage a successful business acquisition:
Sit Back and Listen
Before you take any serious action, sit back, observe, listen, and note. You are going to have problems you’ve never dealt with before, new talent to get to know, new divisions that have to be created, new tech, IP, and, in some cases, new markets to learn how to optimize. The best thing for anyone overseeing an acquisition is to know when to step back and simply listen.
Create an Acquisition Team
You’ll need experts to guide the transition from two companies to one company absorbing the other. This is really the first thing you should do. Assemble your transition team for the acquisition. This isn’t a permanent management team, rather these are people who specialize in merger and acquisition services. Acquisition teams might comprise executive-level experts, an attorney, human resources, an IT expert, and others.
Complete Due Diligence
You don’t buy anything in business without doing due diligence first. Do an objective analysis exploring contracts and leases, financial statements, tax returns, and reviewing any other important documents that could impact their value. In this process, you will also identify the liabilities and debts you want to be aware of before taking over operations.
Navigate Friction Slowly
A little respect goes a long way. You may have all these plans of what you want to do with a business you’ve acquired. Excellent! …but go slow. A company has employees, customers, products, and services that must be respected. People have to be respected. Be diplomatic in the changes you make, be patient with employees, and take the time to build trust.
Be Direct with Internal Managers
Company culture is set from the top down. Your managers are going to communicate to employees what they get from those above them. Assign tasks and detailed responsibilities. Identify who will be accountable for what. Even in the planning, negotiation, and executing stages, you will have teams where you want to be clear in your directives for what’s expected.
Don’t Do It If You Aren’t Financially Stable
A lot of acquisitions fail because the money isn’t there to support it. Just like when a business is starting out, an acquisition can feel like you’re starting over. You need to be financially stable. If you aren’t profitable, generating a healthy amount of revenue, and with strong investors behind you, you’re setting yourself up for failure.
You’re putting a lot at risk while attempting an acquisition when your company’s financials aren’t there. You could run out of money midway through transition. This means you may have to delay things or run into all sorts of terrible scenarios that could ultimately result in crippling consequences.
Be Transparent with Managers
In acquisitions, studies show roughly 25% of acquired executive-level management leaves in a year or less. In the second year, you are likely to lose another 15% of either executive-level management or those pegged for promotions to these positions. How you can reduce this is to be transparent in your communication.
Managers leave when a company turns into something they didn’t sign up for, or when there’s conflict or better opportunities elsewhere. With an acquisition, be open with your communications to your selected management team.
Be Transparent with Employees
Employees are anxious. Morale is likely to be down. They may fear for their job security or be wondering about their career trajectory with an acquisition. If you aren’t transparent and don’t communicate clearly, employees will rely on rumor. Like management, employees will depart as well.
A successful acquisition is one that offers speedy solutions and minimizes these exoduses before they happen. You want employees to feel valued and respected, and to eliminate any sort of baseless rumor or irrational thinking.
Be Transparent with Customers
For as many managers and employees you are at risk of leaving, even more customers will abandon a brand that’s been acquired. From suppliers to general consumers, don’t ignore or underappreciate these people. A savvy competitor can swoop in and scoop them up, with stability, deals, and promotions you don’t yet have in place.
Communicate a new strategy to target customers as quickly as possible post-acquisition. For the best results, use a digital marketing team to manage, monitor, and execute the strategy.
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