As a business owner, one is however are always in search of how one can grow the business. One however wants to make more money and also in order to serve a larger customer base. The problem is thus identifying the best way in order to grow the business, and thus also doing so at a rapid pace.
Mergers and Acquisitions (M&A) are considered as a great way in order to grow business without however having to wait years for the marketing and also sales strategy in order to pay off. When one however needs immediate growth for the business, this can thus be the best option for one that thus provides the instant result. The primary goal of a company which is interested in a merger or acquisition is thus to secure an opportunity that will thus either achieve the objective of growth or to provide an area of expansion that will thus add to the product/service line in a market that is thus currently not served by the company. The motivation behind this pursuit is thus that the resulting combination of the products, key people, and the existing pipeline will however allow the business in order to operate in the new markets and also offer new options to their existing market.
Over time, merger or acquisition opportunities may however present themselves as a growth opportunity for the business. M&A can thus be very distracting to an early-stage business thus still trying in order to optimize their stand-alone business. Especially when things can however often go awry in the merging businesses, management teams and also employee cultures. But, assuming if one has done his homework on those fronts, and one is also comfortable in thus taking the leap into world of M&A, here are however five considerations when setting one is M&A goals for business.
1. What Does the M&A Target Bring You?
There are however many things which an M&A transaction can thus bring one : the customers, market segments, operating scale, revenues, cost savings, human talent, new products, capital, patents, and everything which one would name it. The key however is thus prioritizing as to what is the most important thing which one’s business needs in order to succeed, preferably something which one however cannot easily build on his own. If one however has the best product in the market, one would thus tend in order to stay away from the targets that thus only brings the customers or an additional market share, as thus those relationships can thus be secured through the strong sales and also the marketing efforts without having to dilute the equity owners. So, one must also focus on the transactions that will thus materially move one’s business to new heights, for the reasons beyond simply an additional market share.
2. Is the Transaction Accretive to Your Shareholders?
Also, one might thus either going to pay for the M&A transaction with cash (which may thus require raising the capital) or either with equity (issuing the additional shares in the company). In the either scenario, it is thus also most likely going to dilute the ownership of the current investors. One might just also want to make sure that the resulting business is thus going to be worth materially more together, than they however are apart, so that the current investors will thus actually have a higher a economic dollar value of stock, even if thus their stock ownership percentage is thus less.
3. Does 1 + 1 = 4?
In one scenario, where one thus merges two similar companies thus both selling into the same customers, one’s combined revenues will thus never be worth more than 1 + 1 = 2.
4. Does the Transaction Improve Your Competitive Position?
Maybe the two competitors are thus in an aggressive pricing battle, lowering their margins farther than they however need to. By however combining, they may thus be able to raise their prices and also the margins however as one company. Or, maybe a #2 and #3 player thus in the market thus combine, in order to create the new #1 player in the market. Or, thus as another example, maybe alone which one however has 50% dependence on one customer or an industry, and also thus combined with however another company one can thus also lower that dependence to 25%, making the business however perceived thus as less risky to the investors. One must thus also think through these advantages when one is however picking optimal transactions.
5. Are the Two Businesses Compatible With Each Other?
Mergers in the business are however very much like the marriages between two individuals. One thus also make sure that one dates a while, before one however combine forces. Also, one must also make sure the two businesses share one combined vision thus for their future. Also, one must make sure that the management teams thus gets along, personality fit wise. One is thus also supposed to make sure the two employee cultures will thus mesh well with each other. One must thus also do everything which one can however do in order to reduce the unwanted employee turnover in the wake of the transaction. If the businesses are thus however not compatible, move on.
Assuming that one however have good answers to the above questions, one is thus probably in a good position in order to proceed with the transaction. But if one however can't craft the right logic, or thus however any warning bells are thus also going off in the mind, it is thus the best in order to walk away. Too many things are thus also naturally going in order to go wrong post an M&A transaction. One also does not want to go into it with the known hurdles out of the gate, as it will thus most likely result in a big distraction and also disappointment for one and also for the shareholders. Before one gets started, one must be sure in order to read this post on thus the other potential M&A pitfalls to avoid.
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