M&A is a great way for businesses to increase their geographic footprint, overtake competitors and gain access to the latest technology, employees or assets. However, M&A is also a lengthy and time-consuming process. Months can be spent assessing potential target companies with formal due diligence that involves the deepest dive into company data – financial, commercial and operational. It can be more difficult to achieve success when the company is situated remotely in the same manner, since similar steps must be followed, but with additional challenges in collaboration and communication.
Preparing for Day One
When a company gets purchased, the first day of operation (known in M&A terminology as “Day 1”) should be planned. This includes establishing company structures, integrating back office infrastructure and IT systems, as well as communicating to staff how things will be handled in the future. The M&A team check my site must also ensure that all necessary documents, including legal agreements, contracts, financial models, are available.
Building a shared Vision
Understanding the similarities and differences in the culture and business goals between the parties is essential to a successful M&A strategy. This is particularly crucial when companies are buying and merging remotely. A new company without an understanding of its goals can lose its direction and create friction at work.
M&A is a high-risk procedure which often results in unintended consequences. Particularly, the sunk cost fallacy can push M&A decision-makers into traps of agreement, where they agree to an agreement that is more costly than the best alternative.