Buying another company is an excellent tactic for growing your company, but are you really ready to do a deal? About 77% of mergers and acquisitions (M&A) fail due to a variety of issues ranging from lack of strategic alignment to incomplete due diligence to culture clashes.
A bad acquisition can leave a company worse off than when it started or even cause lasting damage to its reputation, culture, and growth trajectory. On the other hand, done right, a successful transaction has the power to elevate a company’s growth to the next level by creating strategic, long-term value.
Fortunately, many of the reasons deals fail can be avoided if you have a carefully laid out strategic plan for acquiring. Before taking action, spend some time thinking about the foundational aspects of both the deal and of your own company. Consider your company culture, vision for the future, goals, and what you hope to accomplish through an acquisition. It is also helpful to make sure you have the right internal team of leaders and external team of third party M&A advisors, legal, tax, and valuation experts. Lastly, don’t forget to think about the financial side: How you will fund the purchase and what impact it will have on your company from a financial and operational standpoint.
See if you’re ready to execute a deal with Capstone’s Acquisition Readiness Assessment. These 10 simple questions will help you take an honest inventory of your current strategic planning as you prepare for M&A.