In the financial press, stories about mergers and acquisitions between SMEs and large corporations are published every day. While increasing revenue and exposure to new clients are often key motivations but it is essential that any business seeking to enter the M&A game has a well thought out strategy to ensure the success of a deal.
A successful M&A is a tangled procedure, and the final result depends on many aspects that both parties must take into consideration. A well-run management team is essential visite site to ensure that your business can effectively navigate the M&A process. External accountants and consultants can help you establish credibility for your M&A strategy if you seek their assistance.
The first step in the process is to perform an extensive financial health check on your company. This includes analyzing profits and losses statements, cash flow, as well as analyzing equity/debt ratio and determining whether you have enough cash to pursue a M&A transaction. The financial health check will also reveal any discrepancies between your Management Accounts and Statutory filed accounts, which can cause confusion for a buyer.
Another important factor is to think about the cost of integrating both companies. This could include physical costs, such as the merging of offices, systems and employees; or it could be a matter of human capital costs, like the calculation of the costs of compensation and benefit programs. By involving human capital experts early in the process, you will be able to effectively assess these costs and incorporate them into the price negotiations for your purchase.