M&A allows companies to expand their geographical reach and gain an edge over competitors, and gain access to new technologies, employees or assets. However, M&A is also a long-lasting and costly process. Months can be spent assessing potential targets with formal due diligence that involves an exhaustive study of company data – financial, commercial, and operational. The process can be even more difficult if a business is remote, since many of the same steps are needed to succeed, but with additional challenges around communication and collaboration.
When a business is acquired, the www.choosedataroom.net/uncovering-merger-and-acquisition-non-formal-secrets/ very first day of operations (known in M&A terminology as “Day 1”) must be planned. This involves setting up corporate structures, integrating IT systems and other back-office infrastructure and forming a relationship with employees on how things will go going forward. The M&A team should also ensure that all important documents, including legal agreements, contracts, financial models, are available.
A successful M&A strategy requires a clear understanding of the differences and similarities between the two parties in terms of culture and business goals. This is especially important when companies acquire and merging from a distance. A new company without a clear vision can lose its direction, and create friction in the workplace.
M&A can be a high-risk process that can have unintended consequences. Particularly the sunk-cost fallacy can lead M&A decision makers into traps that lead to agreement where they accept an arrangement that is less than the alternative.