Some do’s and don’ts in the M&A process.

Pre-acquisition phase, here the information is collected and analysed to identify the most suitable target company. For a small to medium business the key factors can be summarized as:

- Agree the objectives before anything else, the long term desired position in terms of product/market, growth profit etc.
- Identify the internal team to manage the verification of the objectives.
- Verify the profile of the target companies, product position, service position (revenues, cancellations, customer issues).
- Ensure a confidentially agreement in place with the chosen few targets.
- Perform initial due diligence on the short list. (Don’t assume – check), financial's, legal, investment, issues.
- Review financial's key ratios, bad debt, payment record.
- Agree on the target, tactically and strategically.

Post-acquisition phase, here the key focus is to establish the success of the business integration against the measures set. This will facilitate the identification of any risk considerations and their management.

- Verification of the assumptions the terms and conditions were based.
- Analysis of the expected and achieved synergies.
- Assessment of the internal, accounting and financial controls, policies and procedures.
- Verification of the customer climate and suppliers are on-side.
- Success of staff integration, morale and evaluation of human resource issues.
- Identification of valuable unidentified human assets.
- Identifying the need for any improvements and growth initiative requirements.
- Verification that the implementation plan is sound.
Note: implementation of any strategy changes once the initial integration has subsided.

Important factors:

* Speed and secrecy is of the essence, during the pre acquisition phase, once customers, competitors, and staff become aware there can be severe impacts to the short term business position.
* Set out a plan and work within the projected deadlines.
* Seek early professional advice, lawyers, accountants, HR, M&A consultant

Post-acquisition phase:

- Agree combined products, services, pricing, approaches to existing customers for cross selling opportunities.
- Agree new organisation structure, don’t have for expediency a managing director for every function and deputy managing director for each function, determine the new structure.
- Communication and timing is critical is this phase, agree the messages before announcing the position one message is critical, sing out of the same sheet.
- Focus on the key factor of sales and revenue do not be distracted by the M&A process from these key tasks.
Implement the new organisation and move forward, consider culture, focus, short-term wins.