Mergers and acquisitions are a healthy part of business in the UK, and an important economic driver; in Q4 of 2021 alone, the total value of domestic mergers was £2.9 billion. Purchasing or merging with another business can be a catalyst for increased growth and market capital for the right businesses, but also represents a significant degree of research and work. The following are three tips for managing an acquisition, that can be easily lost in the web of numbers and legal documentation.
Define Your Aims Early
In order to enter into a business acquisition process, you as a leader and together as a business need to be aligned with your ambitions, and resolute in your aims. This necessitates significant preparation, in the form of projected business plans, growth strategy and the answering of existential questions regarding your existing business and its trajectory. In short, you need to define your business’ long-term goals, and ensure that the resources expended on any potential acquisition will directly assist the completion of those goals.
Research Finance Avenues
The financial aspect to any business acquisition or merger is a considerable one, encompassing far more than the simple asset portfolio of the business being purchased. The business itself must be valued by an independent adjudicator, according to its situation in the market and projected growth pattern. Altogether, financing an acquisition can be complicated and expensive business – rendering the comprehensive research of finance solutions nothing short of mandatory.
While many businesses have an abundance of liquid assets, it is highly unlikely that any merger or acquisition will take place outright. Often, the risk is too great to place the value of the acquisition in up-front. As such, larger businesses and SMEs alike benefit from utilising lending solutions to subsidise any agreement. Asset-based lending enables a business to leverage their existing assets in order to receive short- or long-term funding, enabling expansion without immediate expenditure. Private capital is also an option, where private investors and shareholders may take a more direct interest in the future of the merged businesses.
Communication is King
Acquisitions can be a long, protracted and multifarious process. Communication is an incredibly valuable trait to possess throughout the process, not only to track and moderate the progression of the deal but also to clue employees and contractors in on the process, and its progress.
Corporate agreements aside, an acquisition can be a turbulent time for the staff cohorts of the buyer and seller business respectively. Regular contact with team leaders, and consistent company-wide communication with updates can ensure that concerns about the merger do not affect business performance. You can use this time to also re-assure colleagues and staff that their positions are safe – and even illustrate them as to the personal benefits the merger may convey to them.
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