M&A: Corporate acquisitions – Remember these six tips
The successful completion of a corporate acquisition requires not only time and expertise but also effort and good advice. Petri Kyllönen, in charge of M&A at Procopé & Hornborg, lists six tips that can help to ensure a successful corporate acquisition.
Do your homework
Prepare for your corporate acquisition carefully. Define the project objectives and clarify why you are active as a buyer. How will the corporate acquisition support the implementation of your strategy or growth targets? If you do not know what you are aiming for, the end result may not take your company forward.
Set goals for the corporate acquisition and communicate them to all parties. It is advisable to review them carefully, both with the team working on the project and with external advisers. The acquisition process does not always progress in a straightforward manner, so the previously set goals will help in the selection of the right legal solutions and to support the competitiveness of the new company.
Organise, engage, manage
A corporate acquisition is a long and laborious process that must be organised well. Consider who will run the project and share the work on different areas. The team is often led by the Chairman of the Board and includes usually the members of the board, CEO, CFO and persons responsible for human resources, legal matters and communication.
Make sure that management is fully committed to the project. If the Chairman of the Board is running the show, the executive management cannot be left behind. Management that is fully committed to the issue plays a key role in integration after the transaction, concretising the benefits and making a success of them. A successful corporate acquisition process requires seamless cooperation between key persons.
Lead the project, manage expectations
Lead the project systematically with realistic timetables. Ensure that expectations are concretely written down and manage expectations. Review the goals in good time both with your own internal team and your advisers, so that the parties can choose the right legal and commercial solutions
Despite having set goals, be open to change. It is not uncommon that the view of the target company and its situation changes during the acquisition process and thus, the expectations can also change along the way as knowledge increases.
Manage the work of the advisers and communicate the goals of the project to them in timely manner. The advisors will then have the opportunity to seek solutions that can facilitate the achievement of the goals. This is especially important if the corporate transaction does not progress from point A to point B in a straightforward manner. If, during the process, you hold bilateral meetings with the seller, remember to communicate the results of the discussion to your project stream heads and advisers.
Identify what competences the buyer has and what needs to be strengthened from outside. What skills and experience are needed for the successful completion of the transaction? Critically evaluate the internal expertise of the buyer before starting the project.
Let realism guide the building of a winning team. Strong focus on merely avoiding transaction costs can result in lack of valuable advice when issues important to the future development of the buyer need to be decided upon.
Choose the right kind of adviser. It is not always necessary to have an enormous range of expertise and a large adviser team which can be burdensome to the buyer’s organisation. Committed special expertise and the experience and good international networks are what are most often needed from the adviser. The adviser should also be able to ensure the team’s expertise, his/hers availability and the ability to deliver the results you expect.
Read the game
Experience will help you to correctly identify your situation in the game. Are bilateral negotiations the best way to proceed or will they end up in an auction? Is the seller seeking an industrial owner or additional capital? Is your negotiating partner the retiring founder of the company or a capital investor brought in to help during the growth stage.
Cultural differences bring added colour to the playing field. In cross-border projects in foreign waters, you must be able to read the situation even better than in your home country. You must be familiar with trading and negotiation practices and cultural differences, and it is often necessary to find the right local advisers as partners.
Well planned is half done
In mergers and acquisitions, it is worth using and listening to advisers to complement the buyer’s own perspective. At its best, with the knowledge and expertise the advisers are able to create the best possible framework for a financially important matter. Solutions often have long-term effects and, at their best, can create an excellent basis for the future competitiveness of the buyer.