M&A is an effective means for businesses to expand their geographical footprint, surpass competitors and gain access to the latest technology and employees as well as assets. M&A can be a lengthy and demanding process. Due diligence can take several months to evaluate potential target companies. This involves an in-depth analysis of operational, financial and commercial information. It can be more difficult to succeed when an organization is located far away and similar steps must be followed but with added challenges in communication and collaboration.

Preparing for Day 1

When a business is purchased, the first day of operation (known in M&A terminology as “Day 1”) must be planned. This includes establishing organizational structures, integrating IT systems and other back-office infrastructure, and communicating with staff regarding how things will be conducted in the future. The M&A team should also make sure that all relevant documents, such as legal agreements, contracts, financial models, are available.

A shared vision

A successful M&A strategy requires a clear understanding of the differences and similarities between the two parties – both in terms of business goals and culture. This is particularly crucial when two companies merge and acquiring remotely. A new organization without an understanding of its goals can lose its direction, and create friction at work.

M&A is a high-risk process which often results in unintended consequences. The sunk-cost fable, particularly, can lead M&A decision makers to fall into agreements where they sign to an arrangement that is less than the best option.

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