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No Mystery to M&A Success – It’s in the way that you do it

by on May 13, 2014

The Color of Money Soundtrack

The key to doing a successful M&A deal is not a mystery.  It’s like buying stock – Buy Low, Sell High.

So look to buy a company for as little as possible.

Look to sell your company for as much as possible.

Simple, right?

It’s in the way that you do it

To paraphrase Eric Clapton, the true key is in the way that you do it.

Eric Clapton did a song called It’s In The Way That You Use It that reached the top of the charts when it was released.

Eric wrote the song in 1986 for the movie, The Color of Money, starring Paul Newman and Tom Cruise, who play pool sharks.

You can see the original video here: It’s In the Way that You Use It

In M&A, like in stocks, there is no real secret to success.  It’s the way you do it that determines success.

The way to do it is to follow the tested and proven essential steps in M&A.

Each deal is different but the PROCESS for EVERY deal is exactly the same.

5 Essential Steps

The M&A process boils down to 5 essential steps, each one building on the other.  It’s important to have a good foundation to build upon, and to constantly measure your findings against your objectives.

  1. Identify – Finding attractive targets is a result of establishing the proper strategic objectives, which results in the acquisition criteria for any deal.   If the strategy is wrong it doesn’t matter how well the deal is executed or integrated, it is still a bad deal.
  2. Initial Review – You’ll look at a lot of target companies before finding one or two interesting enough to move forward with.  They may not be bad companies; they’re just not the RIGHT target.
  3. Due Diligence and Negotiations – Forward-Looking Due Diligence will build the foundation for a successful deal and the realization of the expected ROI.
  4. Documentation and Closure – There are hundreds of deal points to address, a lot of them around mitigating and allocating risk.  There is a lot more to closing a deal than agreeing on the sales price.
  5. Integration – This is the most under-appreciated and overlooked task in the entire process and it requires a specific skill set.  It’s easy to lose focus once the deal closes as each of the execs goes back to their normal jobs but it’s important to assign a program manager to stay attentive to the details.  That’s the best way to ensure that the deal produces the expected ROI.

Conclusion

There is no mystery to doing successful M&A deals.  The process for every deal is the same.  What makes a deal a great one is in the way that you do it.

The bottom line when it comes to M&A deal success: you do the right activities—in the right ways—and you get the right results.

Make Your Deal a Great One

Thinking about buying another company or possibly selling your own and want to learn more about making your deal a great one?  Contact Mike Rogers today for a complimentary, no obligation, initial consultation to determine if he is the right person to help you reach your goals.  No matter what, you’ll walk away from the meeting with him more confident about your future!

If you’re wondering how you build a company that you can sell for a premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and learn the 5 step process on How to Quickly Increase Your Valuation by Thinking and Acting Like A PE Firm.  http://www.therevenuegroup.net/free-offer.html

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From → Integration, M&A, Strategy

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