What You Should Know About the Mergers and Acquisitions Process
One of the best ways to expand your business is by acquiring or merging with a competitor. You can also merge with companies that provide alternative or complementary products. These strategies can reduce your competition and give you valuable assets, including human assets, that will help you grow. This is what you should know about the process.
Evaluate All Potential Growth Strategies
The first step is to evaluate every growth strategy available. Search for the most efficient, cost-effective, and beneficial strategy. If you feel that a mergers and acquisitions strategy is best, you move on to creating your plan.
Determine your exact goals for this strategy. For example, do you hope to eliminate competition, gain the other brand’s customers, integrate key skill sets, or expand your product line? You should also discuss what you are looking for (criteria) in an acquisition. Then, determine how you will search for companies that meet these criteria.
Start Your Search and Valuation Process
Your next step is to locate companies that meet your criteria. You need to conduct a full valuation analysis to determine whether the target’s financials and assets fit your needs. You will gain limited information initially, typically only what is part of public record, but it will give you a good idea about whether you should continue with each company. However, you should learn about key employees during this valuation and research phase.
Negotiate Your Merger or Acquisition
Your process will start with contacting the company’s ownership. The goal is to gain information that is not readily available to the public. This will allow you to conduct a more in-depth analysis of the business as a whole. You can also learn more about the company and its customers, financials, key employees, and any challenges they currently face. Find out everything you can about the company, and search for anything the management or ownership is trying to hide.
If the business does not fit your criteria after a thorough evaluation, walk away. If it does, you can pursue the next stage.
Build a Merger Strategy
Now that you know all that the company has to offer, you can start determining how best to merge the companies. You may have to create termination or restructuring plans for the added employees, but you should also address other assets, such as machinery and real estate. Also, determine your financing strategy.
After you have conducted all your research, built your plan, and spoken with your prospects, you are ready for the final step in your mergers and acquisitions process, creating and closing the deal. Although the process is time-consuming, do your due diligence.
Seek Expert Assistance
Financing is arguably one of the most important aspects of launching a business because you must have funding to meet company goals and sustain your startup when the economy naturally fluctuates. Finding good commercial finance solutions should be one of your top priorities if you want to build a thriving business, and JT Commercial Capital includes many avenues of financing in our portfolio of funding options.